Income Tax E-Filing of ITR-7 applies to charitable trusts, religious institutions, political parties, research associations, and specified funds that claim exemption or special tax treatment under the Income-tax Act.
Unlike other ITR forms, ITR-7 is condition-based, not income-based.
A trust may have zero tax payable, but still lose exemption if compliance conditions are
missed.
- Valid registration or approval
- Proper application of income
- Correct audit and disclosure compliance
You must file ITR-7 if you claim exemption under
- Section 11 / 12 – Charitable or religious trusts
- Section 10(23C) – Approved funds, hospitals, universities
- Section 13A / 13B – Political parties, electoral trusts
- Section 10(21), 10(23AAA) – Research institutions
ITR-7 is filed electronically on the portal of the Income Tax Department and is closely
scrutinised.
Eligibility Criteria for ITR-7
- You are a trust, institution, fund, authority, or political party
- You are claiming exemption or special status
- You are required to report application, accumulation, or corpus
You should not file ITR-7 if
- You are a company not claiming exemption (ITR-6 applies)
- You are an individual, HUF, firm, or LLP
- You are a trust not claiming exemption (ITR-5 may apply)
Major Update: 10-Year Registration Relief for Small Trusts
Effective from 1 April 2025 (relevant for AY 2026-27)
Eligibility
- Trust’s total income (before exemption) does not exceed ₹5 crore
- Condition satisfied in both of the preceding two years
Benefit
- Registration validity extended to 10 years (earlier 5 years)
- Significantly reduces Form 10AB renewal frequency
This is a major compliance relief for small and mid-sized NGOs.
Income Covered Under ITR-7
ITR-7 requires reporting of
- Voluntary donations (including corpus)
- Grants and funding
- Income from property held under trust
- Interest, dividend, and other income
- Capital gains (if any)
- Foreign contributions (subject to FCRA)
Detailed schedules include
- Application of income
- Accumulation under Section 11(2)
- Specified persons & related-party transactions
- Investments under Section 11(5)
Audit & Form Selection – High-Risk Area
Correct Audit Form (Critical)
- Form 10B → Large / complex trusts
- Income > ₹5crore,or
- Foreign contributions, or
- Multiple activities
- Form 10BB → Smaller, basic trusts
Audit report must be filed at least one month before the ITR due date.
Corpus Donations – Important Compliance Condition
Corpus donations are exempt only if
- Specifically earmarked for corpus (building/endowment), and
- Invested strictly in modes specified under Section 11(5)
Improper investment can convert corpus into taxable income.
New Relief: Curative Updated Return (Section 139(8A))
Budget 2026 allows trusts to
- File an Updated Return to reduce excess loss reported earlier
- Earlier restriction (only upward income revision) has been relaxed
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