ITR-7 Form Explained AY 2026-27: FAQs for Trusts, NGOs and Exempt Entities

ITR-7 is filed by charitable and religious trusts, NGOs, political parties, and institutions claiming exemptions under Sections 139(4A) to 139(4D) of the Income Tax Act. Over 4.32 lakh institutions are registered for tax exemption in India. For AY 2026-27, the single biggest change is the abolition of Forms 10B and 10BB and their replacement with unified Form 112.

Key Takeaways

  • Form 112 (unified audit report) replaces Forms 10B and 10BB from April 1, 2026 — affects over 2.25 lakh annual NGO/trust filings.
  • Section 12AB registration is mandatory; Finance Act 2025 extends validity to 10 years for trusts with income below Rs 5 crore in each of the two preceding years.
  • 85% of income must be applied for charitable purposes; the trust may accumulate up to 15% by filing Form 10 before August 31, 2026.
  • Corpus donations are capital receipts — they are NOT subject to the 85% application rule.
  • Anonymous donations face 30% tax under Section 115BBC, with a threshold exemption for amounts not exceeding 5% of total donations or Rs 1 lakh.
  • Filing deadline: October 31, 2026 (audit cases); Form 112 audit report by September 30, 2026.

Who must file ITR-7?

ITR-7 covers four distinct categories of exempt entities:

  • Section 139(4A): Charitable or religious trusts and institutions claiming exemption under Sections 11 and 12
  • Section 139(4B): Political parties claiming exemption under Section 13A
  • Section 139(4C): Scientific research associations, news agencies, hospitals, educational institutions, mutual funds, investor protection funds, trade unions claiming exemptions under Section 10
  • Section 139(4D): Universities, colleges, or other institutions not required to furnish returns under any other provision

The test is always the same: does the entity specifically claim one of these exemptions? If yes, it files ITR-7. If no, it uses the return form appropriate for its legal structure.

Does a charitable trust need to file ITR-7 even if fully exempt?

Yes. Full exemption does not eliminate the filing obligation. Non-filing attracts prosecution risk under Section 276CC. The “we had no taxable income so we didn’t file” argument never succeeds in penalty proceedings. Every charitable trust registered under Section 12AB must file ITR-7 for every assessment year, without exception.

Can a Section 8 company file ITR-7?

Only if it has separately registered as a charitable institution under Section 12AB and actively claims Section 11 exemption. The Section 8 incorporation under the Companies Act alone does not qualify the entity for ITR-7. A Section 8 company without Section 12AB registration must file ITR-6 and pays corporate tax on its surplus.

Form 112: The critical AY 2026-27 change

With effect from April 1, 2026, Forms 10B and 10BB have been abolished and replaced with a single unified audit report: Form 112. This applies to all charitable and religious trusts required to get their accounts audited under Section 12A(b) or Section 10(23C).

Key deadlines:

  • Form 112 audit report must be filed by September 30, 2026
  • ITR-7 itself must be filed by October 31, 2026
  • Form 112 must be filed before ITR-7 — the portal links them

The 85% application rule explained

A charitable trust must apply at least 85% of its income towards its charitable objectives in the same financial year. The remaining 15% may be accumulated. If a trust needs to accumulate more than 15%, it must file Form 10 before August 31, 2026, specifying the purpose and the period (maximum 5 years) for which the accumulation is intended.

What counts as “income” for this rule? Gross income minus excluded items (corpus donations, capital receipts). Corpus donations received are NOT income for this purpose — they go directly to the corpus fund and bypass the 85% rule entirely.

Anonymous donations and Section 115BBC

Anonymous donations received by a charitable trust are taxed at 30% under Section 115BBC. The exemption threshold is the higher of:

  • 5% of total donations received, or
  • Rs 1 lakh

Anything above this threshold is taxed at 30% regardless of how the funds are used. Religious trusts (not charitable) are fully exempt from Section 115BBC.

Common ITR-7 mistakes to avoid

  • Filing ITR-7 without valid Section 12AB registration — exemption will be denied
  • Using old Form 10B or 10BB instead of new Form 112 for AY 2026-27
  • Counting corpus donations as income in the 85% computation
  • Missing the Form 10 deadline for accumulation beyond 15%
  • Not disclosing donor details in Schedule VC where required

Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Consult a qualified Chartered Accountant for advice specific to your situation. All figures and dates are based on information available as of May 2026.