ITR Series: Day 14:ITR-7 – The Return for Charitable Trusts, Institutions & Political Entities

Unlike other ITR forms that focus on individual or business income, ITR-7 is a return with a purpose. It’s specially designed for charitable and religious trusts, political parties, research institutions, and educational/medical entities claiming tax exemptions under specific provisions of the Income Tax Act.

Let’s unpack this form.

Who Can File ITR-7?

ITR-7 applies to entities required to file returns under Sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income Tax Act. These include:

• Section 139(4A) – Charitable and Religious Trusts claiming exemption under Section 11 & 12
• Section 139(4B) – Political Parties eligible for exemption under Section 13A
• Section 139(4C) – Scientific Research Institutions, News Agencies, Trade Unions, etc.
• Section 139(4D) – Universities, Colleges, and Educational/Medical Institutions not required to file returns under other provisions
• Entities claiming exemption under Section 10(23C), 10(21), etc.

 Did you know?

 Even if an institution has zero taxable income, it must file ITR-7 to maintain its exempt status.

Who Cannot Use ITR-7?

ITR-7 does not apply to:

• Individuals, HUFs, Firms, LLPs, or Companies not registered under the above section.
• Entities not claiming exemption under Sections 11, 10(23C), etc. – use ITR-5 or ITR-6 as applicable

Key Structure of ITR-7

Despite being a specialized return, ITR-7 demands full disclosure of income, application of funds, donations, and compliance documents:

1. Part A – General Information
2. Part B – Income and Tax Computation
3. Schedule AI – Aggregate Income
4. Schedule ER/EC – Revenue & Capital Expenditure (especially for educational/medical institutions)
5. Schedule BP – Business income, if any
6. Schedule HP, CG, OS – Income from house property, capital gains, and other sources (if applicable)
7. Schedule VC – Voluntary Contributions
8. Schedule TDS/TCS/Advance Tax
9. Schedule FSI/FA/TR – Foreign income, assets, and tax relief (if applicable)
10. Schedule 10, 10A, 10AA, 10B – Details on exemptions claimed under relevant subsections
11. Audit Reports – If required under Section 12A(1)(b), 10(23C), etc.

Important Considerations

• Audit Requirement: Mandatory if total income exceeds the basic exemption limit before claiming exemption
• Form 10B / 10BB: Must be filed online before due dates to claim exemption under Section 11 or 10(23C)
• Application of Income: At least 85% of income must be applied for charitable purposes to retain exemption
• Corpus Donations & Anonymity: Must be correctly classified—anonymous donations may attract tax under Section 115BBC
• PAN of Donors: Required for donations over ₹2,000—important for institutions issuing 80G certificates
• Foreign Contributions: Must be declared, and compliance with FCRA is essential

💡 “Transparency is not just a value—it’s a tax mandate for exempt institutions.

Why ITR-7 Is Uniquely Detailed?

• Focuses on utilization of income, not just earning—this is reverse of most tax forms
• Requires detailed reporting of donations received and funds applied
• Tax-exempt status depends heavily on compliance with documentary, audit, and reporting standards
• Misreporting or failure to file Form 10B/Form 10A can lead to loss of exemption

Final Word

ITR-7 isn’t just a return—it’s a statement of purpose. Trusts, NGOs, political parties, and institutions must showcase that funds are used for the cause, not personal or unrelated gain.

🔍 Non-compliance may lead to denial of tax exemption and back-tax liabilities.

✍️Pro Tip:- Professional assistance is a must—especially with audits, exemption certificates, and trust compliance documentation.