ITR-7 Return Filing in India
ITR-7 is a tax return form used by specific entities to file their income tax returns in India. It is applicable to:
- Trusts and charitable organizations (Section 11, 12, 12A)
- Political parties
- Scientific research associations
- Universities and other educational institutions
- Other entities that are required to file returns under various sections of the Income Tax Act (e.g., Section 10(23C)).
Key Points:
- It is for entities claiming tax exemptions or deductions under relevant sections.
- The form requires disclosure of income, exemptions, and donations.
- It is primarily used by organizations that are not required to pay tax on their income, such as charitable or religious trusts.
- ITR-7 allows these entities to claim tax benefits while complying with tax reporting requirements.
WHO CAN FILE ITR-7?
- Trusts/Charitable Organizations – Registered under Section 12A/12AA, claiming exemptions under Section 11.
- Political Parties – Registered under Section 29A of the Representation of the People Act, 1951.
- Scientific Research Associations – Claiming deductions under Section 35.
- Universities/Educational Institutions – Claiming exemptions under Section 10(23C).
- Hospitals/Medical Institutions – Claiming exemptions under Section 10(23C).
- Other Institutions – Claiming exemptions or deductions under Sections 10, 80G, 80GGA, etc.
WHO CANNOT FILE ITR-7?
- Individuals, HUFs, and Firms – These entities cannot file ITR-7 as it is meant for specific organizations only, such as trusts and political parties.
- Companies – Any company, including those that are not claiming exemptions under Section 11, cannot file ITR-7. They must file ITR-6.
- Non-Exempt Charitable Institutions – Charitable or religious institutions that do not claim tax exemptions under Section 11, Section 10(23C), or similar sections should not file ITR-7.
- Government Entities – Certain government organizations not involved in claiming exemptions or deductions under the relevant sections cannot use ITR-7.
- Private Trusts or Businesses – If a private trust or business entity does not claim exemptions under the relevant sections of the Income Tax Act, they should file a different ITR form, such as ITR-5 or ITR-6.
In summary, ITR-7 is for organizations claiming tax exemptions or deductions under specific sections, and not for regular individuals, companies, or non-exempt entities.
STRUCTURE OF ITR-7:
The ITR 7 income tax form has been divided into two parts and nineteen schedules.
- Part A General information
- Part B Outline of the total income and tax computation concerning income chargeable to tax.
Schedule |
Purpose |
|---|---|
Schedule-I
|
Details of amounts accumulated/ set apart within the meaning of section 11(2) in last year’s viz., previous years relevant to the current assessment year.
|
Schedule-J
|
Statement showing the investment of all funds of the Trust or Institution as on the last day of the previous year.
|
Schedule-K
|
Statement of particulars regarding the Author(s)/ Founder(s)/ Trustee(s)/ Manager(s), etc., of the Trust or Institution.
|
Schedule-LA
|
Details in case of a political party.
|
Schedule-ET
|
Details in case of an Electoral Trust
|
Schedule-HP
|
Computation of income under the head Income from House Property.
|
Schedule-CG
|
Computation of income under the head ITR.
|
Schedule-OS
|
Computation of income under the head Income from other sources.
|
Schedule-VC
|
Details of Voluntary Contributions received
|
Schedule-OA
|
General information about business and profession
|
Schedule-BP
|
Computation of income under the head “profit and gains from business or profession
|
Schedule-CYLA
|
Statement of income after set off of current year’s losses
|
Schedule-MAT
|
Computation of Minimum Alternate Tax payable under section 115JB (n)
|
Schedule-MATC
|
Computation of tax credit under section 115JAA
|
Schedule AMT
|
Computation of Alternate Minimum Tax payable under section 115JC (p)
|
Schedule AMTC
|
Computation of tax credit under section 115JD
|
Schedule-SI
|
Statement of income which is chargeable to tax at special rates
|
Schedule-IT
|
Statement of payment of advance-tax and tax on self-assessment.
|
Schedule-TDS
|
Statement of tax deducted at source on income other than salary.
|
Schedule-TCS
|
Statement of tax collected at source
|
Schedule FSI
|
Details of income accruing or arising outside India
|
Schedule TR
|
Details of Taxes paid outside India
|
Schedule FA
|
Details of Foreign Assets
|
- Claim Tax Exemptions: ITR-7 allows trusts, charitable organizations, and other eligible entities to claim tax exemptions under sections like Section 11 (income from property held for charitable purposes), Section 10(23C) (for educational and medical institutions), and other related sections.
- Legal Compliance: Filing ITR-7 ensures that charitable and non-profit organizations meet the legal requirements set by the Income Tax Act, thus avoiding penalties, fines, and legal consequences for non-compliance.
- Tax Deductibility for Donors: It helps donors of the organization to claim deductions under Section 80G for their donations to charitable institutions, promoting donations and enhancing the organization's funding.
- Transparency and Accountability: Filing the return promotes transparency in financial activities, as it requires disclosure of income, expenses, and donations, making it easier for the tax authorities to verify and ensure the organization’s compliance.
- Carry Forward of Losses: For entities eligible for tax exemptions under specific sections, the return allows the carry forward of any losses incurred in the current financial year to offset future income, reducing future tax liabilities.
- Better Financial Management: Filing ITR-7 helps organizations to assess their financial position, manage funds more effectively, and ensure that their income and expenditure are aligned with their goals and regulations.
- Enhance Credibility: Regularly filing ITR-7 enhances the credibility of an entity, making it easier for the organization to attract funding, apply for grants, or gain recognition as a legitimate and compliant organization.
- Boost Public Trust: Transparent filing of tax returns can help build public trust in charitable and non-profit organizations, ensuring that donors and other stakeholders have confidence in how funds are managed.
- Qualification for Government Grants or Subsidies: Many government grants or subsidies require organizations to be tax-compliant, and filing ITR-7 can be a step toward qualifying for such financial assistance.
- Avoid Legal Scrutiny: Timely filing of ITR-7 reduces the risk of the organization facing any legal scrutiny or challenges from the Income Tax Department, as the organization has fulfilled its tax obligations.
In summary, ITR-7 benefits eligible entities by ensuring tax exemptions, legal compliance, and financial transparency, while helping them attract donations, qualify for government grants, and manage funds efficiently.
Personal Information:
- PAN Card (Permanent Account Number)
- Aadhaar Card (for verification purposes)
- Address Proof (residence proof for the trust, political party, etc.)
Income Details:
- Form 16/16A (for salaried individuals or persons receiving income through TDS)
- Form 26AS (TDS/TCS certificate)
- Bank Statements (to verify income such as interest from savings accounts)
- Income details from other sources (such as rental income, dividends, etc.)
Trust-Specific Information (if applicable):
- Trust Deed (for trusts to confirm their objectives, registration, and activities)
- Audited Financial Statements (including Balance Sheet and Profit & Loss Account)
- Auditor's Report (if applicable, as part of the filing process)
- PAN of the Trust/Institution
Exemptions and Deductions (if applicable):
- Section 80G receipts (for donations made to charitable organizations)
- Section 80U/80D (for medical expenses, insurance premiums, etc., if applicable)
- Details of any other applicable exemptions such as depreciation, capital gains, etc.
Other Documents:
- Details of any unabsorbed depreciation (if applicable)
- Details of capital gains or losses (including investment statements)
- Foreign income, if applicable (including TDS on foreign income, tax treaties)
- Tax audit report (if applicable)
For Political Parties (if applicable):
- Contribution receipts (for donations received by the party)
- Election expenses (if applicable)
To file ITR-7, follow the steps below. The process can be done online through the Income Tax Department's e-filing portal. Here's a step-by-step guide:
Step 1: Prepare the Necessary Documents:
Ensure you have all the required documents ready, such as:
- PAN of the entity.
- Audited financial statements (Balance Sheet, Income & Expenditure Account).
- Donation receipts, TDS certificates, or any other tax credit certificates.
- Registration certificates (e.g., under Section 12A for trusts).
- Bank account details for refund (if applicable).
Step 2: Register/Login to the e-Filing Portal:
- Visit the Income Tax e-Filing Portal:
- Register if you don’t have an account, or login using your user ID and password (PAN is typically the user ID).
- If the entity is already registered, make sure to use the authorized signatory's login credentials to access the return filing option.
Step 3: Select the ITR Form:
- After logging in, go to the e-File menu and select Income Tax Return.
- In the form section, choose ITR-7 from the list of available forms.
- Select the Assessment Year (AY) for which you are filing the return (e.g., AY 2024-25 for the financial year 2023-24).
Step 4: Fill in the Details in ITR-7:
- Personal/Entity Information:
- Enter the PAN, name, address, and other details of the entity.
- Select the nature of the entity (e.g., trust, political party, charitable institution, etc.).
- Income Details:
- Report income from charitable/religious activities, grants, donations, or any other sources.
- If applicable, include income from business or other sources.
- Exemptions and Deductions:
- Fill in Section 11 (income from property held for charitable purposes).
- Include donations received and the exemption claims under sections like Section 10(23C) or Section 80G.
- Tax Computation:
- Enter the taxable income, any applicable deductions, and compute the net tax liability or refund due.
- Include details of any TDS (Tax Deducted at Source) or advance tax paid.
Step 5: Attach Supporting Documents (if required):
- Attach scanned copies of documents such as the Audit Report, donation certificates, or registration certificates as necessary.
- Ensure that the documents are in the required format (PDF, JPEG, etc.).
Step 6: Review the Return:
- Double-check all the information entered in the form for accuracy. Ensure that there are no discrepancies between the reported income and the supporting documents.
- Verify all details, including exemptions, deductions, and any tax payments made.
Step 7: Submit the Return:
- Once satisfied with the form, click on Submit.
- After submission, you will receive an acknowledgment or acknowledgment number that you should save for future reference.
Step 8: Verify the Return:
To complete the filing process, you need to verify the return:
- E-Verify the return using one of the available methods:
- Aadhaar OTP (if linked to your PAN).
- Digital Signature (if applicable).
- Bank Account Details (for verification using net banking).
- Alternatively, you can also send a signed physical copy of the ITR-V to the Income Tax Department if you choose not to e-verify.
Step 9: Track the Status:
- After submitting and verifying the return, you can track its status on the e-filing portal.
- If any further action or clarification is required by the tax department, they will notify you through the portal.
Due Date for Filing ITR-7:
- For Trusts and Charitable Institutions (Section 139(4A)):
- Due Date: Generally, 31st October of the assessment year (AY).
- However, if the accounts are required to be audited, the due date may be extended to 30th November of the assessment year.
- For Political Parties (Section 139(4B)): Due Date: 31st July of the assessment year.
- For Other Entities Filing Under Sections 139(4C) and 139(4D): Due Date: Usually 31st October of the assessment year, but it may be extended depending on specific circumstances, such as the entity being required to undergo a tax audit.
Penalty for Late Filing of ITR-7:
- Late Filing Penalty Under Section 234F:
- If you file after the due date but before 31st December, the penalty is ₹5,000.
- If you file after 31st December, the penalty increases to ₹10,000.
- For small taxpayers (with income less than ₹5 lakh), the penalty is reduced to ₹1,000, regardless of when the return is filed (i.e., after the due date).
- Interest on Late Payment:
- Section 234A: Interest at 1% per month will be charged on the amount of tax due if the return is filed after the due date and tax remains unpaid.
- Section 234B: If there is any advance tax due and it is not paid by the due date, interest of 1% per month will be charged on the unpaid amount.
- Section 234C: This applies if the advance tax payments are lower than the required amount, resulting in a penalty.
- Other Consequences of Late Filing:
- Delay in processing refund: If you’re due for a refund, late filing may delay the processing of your refund.
- Prosecution for non-filing: In extreme cases of willful non-filing, a prosecution may occur, resulting in a penalty or imprisonment.
Key Points to Remember:
- Timely filing of ITR helps avoid penalties and ensures smooth processing of your return.
- For entities like trusts or political parties, keeping track of specific deadlines is crucial, as the due date may vary based on their nature or requirement for an audit.
Understanding income tax slabs is key to effectively managing your tax obligations in India. These slabs are structured to align with the principle of progressive taxation, where higher income leads to higher tax rates. This ensures an equitable distribution of the tax burden across the population.
Categories of Income Taxpayers in India
India’s tax system divides taxpayers into three primary categories based on age:
- Individuals Under 60 Years: Regular working individuals and professionals.
- Senior Citizens (60–80 Years): Enjoy higher exemption limits due to lower earning
potential in retirement. - Super Senior Citizens (Above 80 Years): Further increased exemptions to reduce tax
burdens on the elderly.
Direct Tax System in India
The government introduced the new tax regime alongside the old one to provide taxpayers flexibility:
- Old Regime: Offers various deductions and exemptions.
- New Regime: Simplified but with fewer exemptions.
Old Regime:
Slabs (Rs.) |
Individuals (Age < 60 years) |
Resident Senior Citizens(60 to 80 years) |
Resident Super Senior Citizens(80 years and above) |
|---|---|---|---|
New Regime:
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Frequently Asked Questions in India
What is ITR-7?
ITR-7 is an income tax return form used by entities that are claiming exemption under sections like 11, 12A, or 12AA (charitable or religious trusts, political parties, or similar organizations)
Who is eligible to file ITR-7?
Entities such as trusts, political parties, charitable institutions, and religious organizations claiming exemption under Section 11 or 12A are required to file ITR-7
What types of organizations can use ITR-7?
Charitable trusts, religious trusts, political parties, and similar nonprofit organizations that receive income exempt from tax are eligible to use this form
What is the due date for filing ITR-7?
The due date is usually 30th September of the assessment year for entities that are not required to undergo an audit. If the audit is applicable, the due date may extend to 31st October.
What documents are required to file ITR-7?
Documents like PAN, financial statements, balance sheets, income and expenditure statements, and proof of donations/receipts must be provided
Can ITR-7 be filed offline?
No, ITR-7 is required to be filed online through the Income Tax Department’s e-filing portal
Is audit required for filing ITR-7?
Yes, an audit is required for entities with annual income exceeding ₹2.5 lakh or if their total income exceeds the exemption limits under Section 11 and 12A
What is Section 11 in ITR-7?
Section 11 deals with the exemption of income for charitable or religious trusts. It provides that income earned by these trusts is exempt from tax provided it is used for the intended charitable purpose
What is the penalty for not filing ITR-7 on time?
A penalty of ₹5,000 is levied if the return is filed after the due date but before December 31. If filed after December 31, the penalty increases to ₹10,000
Can an organization file ITR-7 after the due date?
Yes, an organization can file ITR-7 after the due date, but a penalty may be applicable depending on when it is filed
Can a political party file ITR-7?
Yes, political parties can file ITR-7 to claim exemption under section 13A, provided they meet the necessary requirements under the law
What is the tax treatment for donations in ITR-7?
Donations made to registered charitable or religious institutions are generally eligible for tax exemptions under Section 80G, and must be reported in the ITR-7
What is the significance of Section 12A in ITR-7?
Section 12A deals with the registration of charitable and religious trusts or institutions for claiming tax exemptions. It is essential for entities to be registered under Section 12A to avail of exemptions under ITR-7
Is there a limit on the amount of exemption a trust can claim?
Yes, the amount of income that can be exempt under ITR-7 is subject to certain conditions, like applying the income for charitable purposes and not accumulating funds beyond a specified limit
How should unspent funds be treated in ITR-7?
Unspent funds should be reported in the form, and they should be applied for charitable purposes in the following year, as per the provisions of Section 11
Can a religious trust file ITR-7?
Yes, religious trusts can also file ITR-7 to claim exemption under Section 11, provided they meet the criteria for a religious trust
What is the role of Form 10 in ITR-7?
Form 10 is used to file a request for accumulation of income for future use, which is allowed under Section 11 of the Income Tax Act
What happens if ITR-7 is not filed by a charitable trust?
If a charitable trust fails to file ITR-7, it risks losing its tax-exempt status under Section 12A, which could lead to taxation of its income
Is it necessary for a trust to file audited financial statements?
Yes, if the trust’s income exceeds the exemption limit or if it is required under the regulations, the organization must file audited financial statements along with ITR-7
Can an individual claim deductions for donations made to organizations filing ITR-7?
Yes, an individual can claim deductions under Section 80G for donations made to charitable trusts or political parties filing ITR-7, provided they meet the prescribed criteria.
