As a step that will allow taxpayers to start filing their returns in advance, the Income Tax Department of India has formally made available the Excel utilities of ITR-2 and ITR-3 for the Assessment Year (AY) 2025-26. The tools are important resources to individuals and Hindu Undivided Families (HUFs) who are within certain limits of income and they want to perform their income tax returns offline and upload the returns in e-filing portal.

This article provides a good idea of what an ITR-2 and an ITR-3 form is, who needs to file them, the main changes that have been made to them in order to use them in AY 2025-26, and the effective use of the Excel utility.

What are ITR-2 and ITR-3 Forms?

The Income Tax Return (ITR) forms are grouped according to type and source of an earnings of a taxpayer. The two types of forms, available currently, serve people and HUFs of varied income patterns.

ITR-2 is meant for:

• Persons and HUF not having business/professional Income
• Those who earn salary/pension and capital gain, house property (One or More), foreign asset, farming income of amount above 5000 rupees.
• Certain, as high- income earners, investors and NRIs also are supposed to apply

ITR-3 is designed for:

• People and HUFs which earn some income via proprietary business or profession
• Fit those who are working as doctors, consultants, freelancers, small business owners, etc.
• Takes into consideration house income property, salary and capital gains among others

What is an Excel Utility?

Excel Utility is an off-line tool given by the Income Tax Department to users who can use it to prepare their returns without being online. After completing filling of the form, one can validate the data and produce an XML file that can be uploaded to the e-filing portal.

 The important features are:

• In-built checks that minimize mistakes
• Auto calculation of the tax liability
• Facility to import pre-filled data in the Income Tax portal Drop-downs, conditional logic make data entry user friendly

The tool will also be useful to individuals with complex income information or those who like working offline.

Latest Changes in ITR-2 and ITR-3 for AY 2025-26

Assessment Year 2025-26 updated forms include some primary modifications that guarantee increased compliance and matching of the modern tax rules:

1. Comprehensive reporting of Foreign Assets

Under more rigorous disclosures made by the tax-payers under Schedule FA of foreign income and assets:

• Name and code of country
• Nature of the asset
• Date of acquisition
• Tax paid and revenue earned abroad

2. Virtual Digital Asset (VDA) Transactions

Revenue realized by Cryptocurrencies and other VDAs are now supposed to be reported in a separate schedule. This includes:

• Purchase date and Sale date
• Acquisition cost
• Income achieved and related tax paid

3. More clarity over capital gains

Reporting of such capital gains has also been simplified through classification of various asset classes i.e.:

• Unlisted shares and listed shares
• Mutual funds equity
• Land/ building
• Bonds and debentures

ISIN codes, holding periods and other details concerning transaction-level specifications may be required.

4. Options of Prefilled Data

The portal is now providing information that can be downloaded by taxpayers by filling in the following information:

• PAN and Aadhaar
• Salary info Form 16
• Interest income in form 26 AS
• AIS capital gains

This helps immensely in cutting out rectification and saves time.

5. Further Disclosures in form ITR-3

In addition to the above, those who are preparing ITR-3 especially the professionals and business people must submit the following additional details:

• The information on balance sheet
• Profit and Loss accounts
• Movements in cash flow
• Information regarding creditors, funded loans and capital accounts (particularly in case when turnover is more than 50 lakh)

Who Should File ITR-2 or ITR-3?

Here’s a quick guide to help determine the applicable form:

Taxpayer Category	ITR-2	ITR-3
Salaried individual with one house	✅
Individual with capital gains	✅
NRI with rental income	✅
Business owner/freelancer		✅
Doctor/lawyer/consultant with practice		✅
Partner in firm (non-audited)		✅

If you are unsure about which form to use, consult a tax expert to avoid compliance issues.

How to Download and Use the Excel Utility

Here’s how to get started:

1. Visit the Income Tax Portal
   • Go to https://incometax.gov.in
   • Navigate to Downloads → Income Tax Returns
2. Choose AY 2025-26
   • Select either ITR-2 or ITR-3
   • Download the Excel Utility (.zip file)
3. Open and Enable Macros
   • Extract the ZIP file and open the .xlsm file in Excel
   • Enable editing and macros to activate full features
4. Fill in the Details
   • Complete each section (General Info, Salary, Capital Gains, etc.)
   • Use drop-downs and guided formats for easy navigation
5. Validate and Generate XML
   • Use the “Validate” button to check for errors
   • Click “Generate XML” to create a file for upload
6. Upload to the e-Filing Portal
   • Log into the portal
   • Go to e-File → Income Tax Return Filing
   • Choose “Upload XML” and complete e-verification

Filing Deadline and Late Fees

As of July 31, 2025, ITR-2 and ITR-3 without the audit have to be filed. Provided that you do not file your return on time:

• You can be charged a late fee as high as 5000 rupees as per Section 234F
• You further can be charged with paying interest on tax arrears under Section 234A, Section 234B and 234C

The extended deadline is October 31, 2025, to taxpayers that need to be audited (mostly ITR-3).

Precautions to Take While Using the Utility

• Make sure you are on the most recent version of excel and ITR utility It is always important to have the Macros enabled to reveal full functionality
• Check the entries prior to the production of the XML
• Match data under Form 26AS and AIS
• Have all the important things (Form 16, TDS certificates, interest statement, etc.) within easy reach

Conclusion

The advanced availability of the ITR-2 and ITR-3 Excel-based utility have provided an early start to the income tax filing season of AY 2025-26 to the taxpayers or professionals. The new versions incorporate new tax changes in the most recent tax changes such as digital asset, foreign income, and increased capital gain disclosures.

It is recommended that taxpayers should start gathering their papers and utilize excel facility long before the deadline. Recent filings which are done earlier not only make them compliant, but prevent the late-hour madness, mistakes, and fines. To know more updates, see the Income Tax e-filing portal or your tax advisor.