ITR-7 Filing for AY 2025–26: Detailed Guide for Trusts, Institutions, and Political Parties

The Income Tax Department has notified the revised ITR-7 Form for Assessment Year (AY) 2025–26, under Notification No. 45/2025 dated May 9, 2025. This form is specifically meant for Filing Income Tax Return of certain entities like trusts, institutions, educational bodies, research organizations, and political parties, which are required to file their income tax returns under specific provisions of the Income-tax Act, 1961.

With increasing focus on financial transparency, proper usage of tax exemptions, and digital compliance, the new ITR-7 introduces several enhancements. These include improved audit disclosures, detailed source-wise income reporting, and integration with the taxpayer’s AIS (Annual Information Statement) and Form 26AS.

Who Should File ITR-7?

ITR-7 is applicable to persons (including companies) required to file returns under the following sections:

1. Section 139(4A) – Charitable and Religious Trusts

Entities claiming exemption under Section 11 and 12, such as:

• Religious and charitable trusts

• NGOs and registered societies

• Section 8 companies engaged in public welfare

2. Section 139(4B) – Political Parties

Registered political parties that claim exemption under Section 13A and have received income from donations, membership fees, or interest.

3. Section 139(4C) – Certain Institutions

This includes:

• Scientific research institutions

• News agencies

• Trade associations

• Hospitals and medical institutions claiming exemption under specific provisions (e.g., Section 10(21), 10(23A), 10(23C)).

4. Section 139(4D) – Educational Institutions

Universities, colleges, and educational institutions that are not required to file returns under any other provisions, but must do so for record and audit purposes.

Who Is Not Required to File ITR-7?

ITR-7 does not apply to:

• Companies not covered under the above sections (they use ITR-6).

• LLPs, partnership firms, and individuals (use ITR-3, ITR-4, or ITR-5 depending on structure).

• Trusts or institutions not eligible for tax exemptions or non-compliant under Section 12AB or 80G.

Key Changes in ITR-7 for AY 2025–26

The updated form reflects structural and disclosure changes aligned with the Finance Act, 2024, and recent policy updates. Here are the major enhancements:

1. Expanded Disclosure of Income and Donations

Entities must now provide detailed source-wise income segregation:

• Voluntary contributions and donations

• Grants or government funding

• Business income (if any)

• Interest and dividend income

• Foreign contributions (separate disclosure if FCRA-registered)

2. Asset & Liability Reporting for Specific Entities

Trusts and institutions must report:

• Movable and immovable assets

• Loans and liabilities

• Cash reserves and investments

• Application of income towards charitable purposes

This aims to ensure end-use tracking of tax-exempt income.

3. Audit Report Integration

If the taxpayer is required to file an audit report (e.g., under Section 12A(1)(b) or 10(23C)), it must be:

• Submitted electronically

• Uploaded at least one month before the due date for ITR filing

Failing to do so will render the return defective.

4. Electronic Filing and Verification

ITR-7 must be filed online through the Income Tax Portal, verified via:

• Digital Signature Certificate (DSC)

• Electronic Verification Code (EVC)

• Aadhaar OTP (if applicable)

• ITR-V (if filed without DSC or EVC) – to be sent to CPC Bengaluru

Filing Deadlines for ITR-7 – AY 2025–26

Step-by-Step Guide to Filing ITR-7

Step 1: Document Collection

Gather key details such as:

• Trust Deed, Registration Certificates (12AB, 80G)

• Annual financials (income, expenditure, balance sheet)

• Donation ledger and receipts

• Previous year’s audit reports

• FCRA compliance certificates (if applicable)

Step 2: Log in and Access Form

• Visit the official income tax portal.

• Log in with the entity’s PAN-based credentials.

• Select ITR-7 from the e-Return dashboard.

Step 3: Fill Relevant Schedules

Include schedules based on entity type:

• Schedule ER – Revenue from exempt income

• Schedule HP – House property income (if any)

• Schedule SP – Application of income

• Schedule VC – Voluntary Contributions

• Schedule FCRA – For foreign grants

• Schedule AI – Accumulated income

• Schedule TDS/TCS – Credit for taxes deducted/collected

Step 4: Audit Report Upload (If Applicable)

Ensure Form 10B (audit) and any other reports (10BB, 10C) are uploaded well in advance.

Step 5: Validate, Verify, Submit

Use DSC, Aadhaar OTP, or EVC to complete filing. If ITR-V is used, it must be printed, signed, and sent to CPC within 30 days.

Important Compliance Notes

• Ensure registration under Section 12AB or 10(23C) is valid and active.

• Cross-verify donation records with Form 10BD (if applicable).

• Institutions must not use ITR-7 if their exemption claim is denied or withdrawn.

• Misreporting or delayed audit uploads can lead to defective returns.

Conclusion

ITR-7 for AY 2025–26 is a specialized return that requires accurate, transparent, and well-documented reporting from exempt institutions, trusts, political parties, and research or educational bodies. With stricter scrutiny on the utilization of tax-exempt funds and digital audits, compliance has become more procedural than ever.

Entities should plan return filing early, ensure all audit and registration formalities are in place, and book a Tradeviser by clicking the link below to navigate the complex structure of this return.