The Indian tax system mandates that certain entities, especially those operating for charitable, religious, political, or educational purposes, file their income tax returns using ITR-7. This form is specifically applicable to those who are required to furnish return under Sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income-tax Act, 1961.

For the Assessment Year (AY) 2025–26, several refinements have been introduced in the structure and schedules of ITR-7 to ensure transparency, better compliance, and alignment with audit reports (Form 10B and 10BB). Institutions such as charitable trusts, NGOs, educational and research institutions, hospitals, and political parties fall within the purview of this return form.

This comprehensive guide is intended to help tax professionals, compliance officers, and trustees file ITR-7 accurately and efficiently. It covers every detail: from who is required to file, recent changes, audit guidelines, critical schedules, legal sections, and common mistakes to avoid.

Who Should File ITR-7?

Entities must file ITR-7[1] if their income is eligible for exemption under Sections 11, 12, 13A, 10(23C), or 10(21), and they are covered under one of the following subsections of Section 139 of the Income-tax Act, 1961:

Section	Applicable To	Legal Reference	Examples
139(4A)	Charitable or religious trusts or institutions	Section 11 & 12	Educational NGOs, religious missions
139(4B)	Political parties	Section 13A	Registered political party with Electoral Trust status
139(4C)	Scientific research institutions, news agencies, hospital funds, etc.	Section 10(21), 10(23A), 10(23B), etc.	SEBI registered research institutions, government funds
139(4D)	Universities, colleges, and other educational institutions not covered under 139(4C)	Not required to furnish income/loss under any other provision	Government colleges, autonomous universities

These entities must not file ITR-5 or ITR-6, even though they may be set up as a trust, society, Section 8 company, or statutory body. ITR-7 ensures detailed disclosure of income and application of funds for entities enjoying tax exemption.

Relevant Legal Sections for ITR-7 Filing

Here’s a list of key sections and their purposes:

Section	Applicability
Section 11	Income from property held under trust for charitable or religious purposes
Section 12	Income of trusts from voluntary contributions (non-corpus)
Section 12A / 12AB	Conditions for availing exemption under Sections 11 & 12
Section 13	Situations under which exemption under Section 11 may be denied
Section 13A	Exemption for income of political parties
Section 10(23C)	Exemption for educational and medical institutions (various sub-clauses)
Section 10(21)	Exemption for research associations and scientific institutions
Section 139(4A to 4D)	Mandates return filing for specific exempt entities
Section 115TD to 115TF	Exit tax provisions on conversion of charitable trust

These legal sections form the backbone for eligibility, compliance, and taxation of trusts and institutions filing ITR-7.

Key Changes in ITR-7 for AY 2025–26

The Income Tax Department has integrated ITR-7 more closely with audit forms (Form 10B/10BB) and compliance tracking tools like AIS and Form 26AS.

Change	Description
Enhanced Schedule VC	PAN and address details of donors required for donations exceeding ₹2,000. Segregation between corpus and general donations mandatory.
Schedule AI	New columns for reconciliation of corpus and income applied during the year. Helps in cross-verification with audited accounts.
FCRA Compliance	Mandatory Schedule FCRA introduced for trusts receiving foreign contributions. Must match with Form FC-4 filed with MHA.
Schedule ER and EC	Capital vs revenue expenditure bifurcation added. Must match data in audit reports.
Integration with AIS	ITR auto-pulls donations and TDS data from AIS and Form 26AS. Must reconcile before final submission.

Due Dates for Filing ITR-7 – AY 2025–26

Type of Filing	Applicable Entity	Due Date
Original ITR (Audit Required)	All trusts, political parties, educational institutions with audit	30th September 2025
Original ITR (No Audit Required)	Entities with gross receipts under threshold limits	31st July 2025
Revised Return	All entities	31st December 2025

Note: If audit reports (Form 10B or 10BB) are not filed on or before the due date, then exemption claims under Section 11 or 10(23C) may be disallowed.

Step-by-Step Filing Process for ITR-7

Filing ITR-7 involves a combination of documentation, audit, and digital filing steps. Here’s how to do it:

1. Pre-Filing Preparation

Finalize books of account
Prepare and file audit report (Form 10B or 10BB)
Reconcile Form 26AS, AIS, and TIS
Gather PAN of top donors, FC-4 details if applicable

2. Login and Choose Return

Log in to incometax.gov.in
Go to e-File → Income Tax Return → File Return
Choose ITR-7 and AY 2025–26
Select relevant Section: 139(4A), 139(4B), etc.

3. Fill Core Schedules

Part A: General, Balance Sheet, P&L
Schedule VC: Voluntary Contributions
Schedule AI: Accretions to Corpus
Schedule ER: Revenue Expenses
Schedule EC: Capital Expenses
Schedule FCRA (if applicable)

4. Verification and Submission

Validate all schedules
Use DSC/EVC for submission
Download and store acknowledgment (ITR-V) and audit report

Audit Compliance – Form 10B & Form 10BB

Every trust or institution seeking tax exemption must file an audit report. The form depends on the nature and size of the entity.

Form	Who Should File	Due Date
Form 10B	Trusts/institutions registered under Section 12AB or 10(23C)(iv)/(v)/(vi)/(via), if income exceeds ₹2.5 crore	30th September 2025
Form 10BB	Institutions with income under ₹2.5 crore, mostly 12AB registered	30th September 2025

Ensure the CA provides a valid UDIN and e-verifies the report. Audit data is auto-imported into ITR-7.

Major Schedules in ITR-7 Explained

🔹 Schedule VC: Voluntary Contributions

Must segregate corpus donations from revenue donations
Mention PAN, address, and mode of receipt
Donations exceeding ₹2,000 in cash are disallowed

🔹 Schedule AI: Accretion to Corpus

Reconciles additions to corpus from donations/investments
Year-on-year balance sheet validation

🔹 Schedule ER: Revenue Expenditure

Breakdown by heads like education, medical relief, salaries
Must match books of accounts and audit report

🔹 Schedule EC: Capital Expenditure

Covers building, land, vehicle, computers
Tied to long-term use by the institution

🔹 Schedule FCRA: Foreign Contributions

Applicable only for trusts registered under FCRA
Must tally with Form FC-4 filed with MHA

Common Errors to Avoid

Filing ITR-5 instead of ITR-7 (especially for Section 8 companies)
Failing to report PAN of major donors
Claiming exemption without 12AB/10(23C) registration
Not filing Form 10B/10BB in time
Donor mismatch with AIS leading to notices

Frequently Asked Questions (FAQs)

Q1. Can a trust with income less than ₹2.5 lakh avoid audit?

Yes, but only if no exemption is claimed and total income is below the basic exemption limit.

Q2. Is ITR-7 applicable to Section 8 companies?

Yes, if they are claiming exemption under Section 11, 12, or 10(23C), they must file ITR-7.

Q3. Do institutions need to file if they are loss-making?

Yes. Filing is mandatory under Section 139(4A-D) regardless of profit/loss.

Q4. How are FCRA donations reported?

Use Schedule FCRA. Also file Form FC-4 on the MHA portal.

Q5. Can foreign universities operating in India file ITR-7?

Only if they are registered under Section 12AB or are eligible under Section 10(23C).

Conclusion

Filing ITR-7 for AY 2025–26 is a significant compliance task for charitable and non-profit organizations. As the tax department is moving toward digitally cross-verifying every claim through AIS, audit reports, and FC filings, institutions must maintain accurate, transparent, and timely records.

Early filing, accurate disclosures, and timely audit reports can go a long way in avoiding scrutiny and penalties. Engage a qualified CA, reconcile every donation, and ensure FCRA and PAN-based donation tracking to stay compliant.

[1] https://incometaxindia.gov.in/forms/income-tax%20rules/2025/itr-7-2025-eng.pdf

Written by Mahboob Gaddi and Farman Ahmad | Founders, Lawgical Search