Today, we are venturing into ITR-7 for Assessment Year (AY) 2025-26, reporting income from Financial Year (FY) 2024-25. It is a monster form for non-profits, trusts, and special entities, but thanks to the recent changes by the Central Board of Direct Taxes (CBDT), it has got some new shades. I shall explain the applicability, major changes, rules, step-by-step filling on the income tax portal, guidelines, tax calculations with examples from real-life scenarios, and references to the recent circulars and notifications.
Who Needs to File ITR-7? Applicability Explained
- Charitable or Religious Trusts (Section 139(4A)): In case your income comes from property being used for charitable or religious activities, you’re welcome. This includes NGOs that own schools or relief missions.
- Political Parties (Section 139(4B)): Political parties whose aggregate income is above the non-taxable limit (excluding exemptions) are required to file to avail themselves of benefits under Section 13A.
- Institutions Seeking Exemption under Section 10 (Section 139(4C)): Consider scientific research associations, news agencies, hospitals, or educational institutions not being operated for profit.
- Universities/Colleges/Research Institutions (Section 139(4D)): Those covered under Section 35(1) which are not required to file under other sections.
- Business Trusts (Section 139(4E)) and Investment Funds (Section 139(4F)): According to Section 115UB.
Other who are eligible to file are companies, corporations, Associations of Persons (AOPs), Bodies of Individuals (BOIs), local governments, and artificial juridical persons that apply these exemptions. If you are not applying under these sections, avoid—ITR-7 is not for you.
Double-check: If your organization conducts projects such as hospitals or research labs, list their names, nature of the activity (e.g., education, medical relief), and registration.
Due Dates for AY 2025-26:
- Non-audit cases: September 15, 2025 (extended through CBDT notification)
- Audit-required cases: October 31, 2025.
Late filing? Pay a fee under Section 234F (maximum of ₹10,000) along with interest under Sections 234A/B/C.
Major Modifications in ITR-7 for AY 2025-26
The CBDT has been busy with releases, with a focus on greater transparency after Budget 2024. Notification No. 46/2025 dated 9th May 2025issued the new ITR-7 form, effective April 1, 2025. The following is new, based on my interpretation of the form and the notifications thereunder:
- Split Reporting of Capital Gains: Schedule CG now needs to report gains from before and after July 23, 2024, separately. Why? Budget 2024 increased Long-Term Capital Gains (LTCG) tax to 12.5% from 10% (not indexed for property) after that date. Also, new columns for share buyback losses (effective October 1, 2024) if dividends are being reported under “Other Sources.”
- Donor-Wise Disclosures: Trusts are now required to specify voluntary contributions donor-wise, with names, addresses, and amount. This aligns with stricter Foreign Contribution (Regulation) Act (FCRA) compliance.
- Improved Schedules:
1.New Schedule IA/DA for past years’ income taxed.
2. Elaborated Schedule J for investment of funds.
3. Mandatory TDS section for reconciliation.
- Accreditation and Registration Details: Greater insights into provisional registrations under Sections such as 12AB or 80G, along with foreign income relief under Schedules FSI and TR.
- E-Filing Validations: Tighter verification to avoid mistakes, such as auto-fill from Last Year’s Form 26AS/Annual Information Statement (AIS). Also, unreported equity share holdings are to be reported with transaction details.
- Other Tweaks: In case of political parties, improved Schedule LA for income details; in case of electoral trusts, Schedule ET revised.
These shifts are the result of amendments under Finance Act 2023 and CBDT’s drive towards data-driven assessment.
Rules and Guidelines: All You Need to Know
Electronic filing of ITR-7 only—no physical returns. Validate through Digital Signature Certificate (DSC, compulsory for political parties), Electronic Verification Code (EVC), Aadhaar OTP, or sending ITR-V by post to CPC Bengaluru within 30 days. Important rules:
- Audit Requirements: Gross receipts above ₹2 crore (or specified lower amounts for some trusts), obtain audited under Section 12A/10(23C). File audit report one month prior to due date.
- Exemptions: Claim under respective sections (e.g., 10, 11, 13A), but support with documents. Spurious claims? Prosecution under Section 277—imprisonment and penalties.
- Mandatory Schedules: Complete based on type of entity—e.g., Schedule VC for voluntary contributions, Schedule AI for application of income.
- Penalties: Late-filing fees under Section 234F, tax on interest due (Sections 234A/B/C). Failure to file? Forfeiture of exemptions.
- Guidelines from CBDT FAQs:
1.Post accurate registration details (e.g., under 12AB, 80G).
2. Mention all projects (names, activities).
3. Specify residential status (resident/non-resident).
How to File ITR-7 on the Income Tax Portal
It is easy to file ITR-7 on the income tax e-filing portal (https://www.incometax.gov.in/iec/foportal/) if you go through the motions.
1.Login:
1.Go to the e-filing portal and login with your PAN (or TAN for some entities) and password.
2. New user? Register with PAN, contact information, and OTP verification.
2.Select ITR-7:
1.Set Text to “e-File” > “Income Tax Return” > “File Income Tax Return.”
2. Select AY 2025-26, choose “ITR-7” from the drop-down, and validate entity type (e.g., trust, political party).
3.Download Utility:
1.Download the ITR-7 Excel/JSON utility (dated August 21, 2025) from the portal’s “Downloads” section.
2. Or use the online form for pre-filled data from AIS/26AS.
4.Fill the Form:
Part A-General: Fill in entity details (name, PAN, address, registration under 12A/80G, etc.).
Schedules:
1. Schedule VC: Voluntary contributions (donor-wise details required).
2. Schedule CG: Capital gains, bifurcation pre/post-July 23, 2024.
3. Schedule OS: Income from other sources (e.g., interest on savings bank account).
4. Schedule AI: Application of income for charitable purposes (at least 85% of income).
5. Schedule LA/ET: For political parties/electoral trusts.
6. Schedule TDS/TCS: Reconcile with Form 26AS.
7. Part B-TI: Calculate total income, subjecting to exemptions.
8. Part B-TTI: Tax calculation (more below).
5.Validate and Generate XML/JSON:
1.Click “Validate” in the utility to trap errors (e.g., lack of donor details).
2. Generate XML/JSON file for upload.
6.Upload and Verify:
1.File the XML/JSON under “e-File” > “Income Tax Return.”
2. E-Verify through DSC/EVC/Aadhaar OTP or deliver ITR-V to CPC Bengaluru.
3. E-Verify in 30 days to prevent invalidation.
Tax Calculation: How It Functions
Tax calculation in ITR-7 filers is based on entity type and exemptions. Here is the lowdown with examples:
Charitable Trusts (Section 11/12):
1.Income utilized for charitable activities (at least 85%) is exempt.
2. Accumulated income (up to 15%) can be carried forward for 5 years if mentioned in Form 10.
3. Taxable income = Total receipts – Exemptions – Applied income.
Tax Rates:
1.Normal income: Slab rates or 30% (for AOPs/BOIs).
2. LTCG: 12.5% (after July 23, 2024) or 10% (before July 23).
3. STCG: 15% (securities) or slab rates.
Political Parties (Section 13A):
1.Exempt if donations are accounted for, and income is derived from specified sources (e.g., contributions, interest).
2. Non-exempt income charged at 30%.
Section 10 Institutions: Exemptions under Section 10(23C) for educational/medical institutions, but business income taxed at 30%.
Example 1: Charitable Trust
- Total Receipts: ₹5 crore (₹4 crore donations, ₹1 crore interest).
- Applied for Charitable Purpose: ₹4.2 crore (84% of ₹5 crore).
- Accumulated Income: ₹0.3 crore (6%, to be utilized within 5 years).
- Taxable Income: ₹0.5 crore (₹5 crore – ₹4.2 crore – ₹0.3 crore).
- Tax: ₹0.5 crore × 30% = ₹15 lakh + cess (4%) = ₹15.6 lakh.
Example 2: Political Party
- Total Income: ₹2 crore (₹1.8 crore donations, ₹0.2 crore interest).
- Exempt (Section 13A): ₹2 crore (all entered, from specified sources).
- Taxable Income: ₹0.
- Tax: Nil.
Note: Surcharge (7-25% depending on the level of income) and 4% cess are applicable. Use Schedule B-TTI for calculation. Interest under Sections 234A/B/C is applicable in case of delay.
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