ITR-7 Filing (Trusts & Institutions)
For trusts, political parties, research bodies and institutions claiming exemption under the Income Tax Act.
ITR-7 is the return filed by trusts, societies, Section 8 companies, political parties, research institutions and other bodies claiming exemption under the Income Tax Act. It must be filed every year even where the whole of the income is exempt.
That last point catches organisations out. Exemption under Section 12A does not remove the filing obligation — it removes the tax. An exempt organisation that stops filing puts the exemption itself at risk.
What this costs
Assisted Tax Filing
₹9,404 plus GST
- Document collection & review
- ITR form identification
- Income computation
- Standard deduction claimed, along with 80C, 80D and 80TTA
- Your liability computed, with a clear statement of tax payable or refund due
- ITR preparation & filing
- ITR acknowledgement copy
Who files ITR-7
- Trusts and institutions registered under Section 12A or 12AB
- Institutions approved under Section 10(23C)
- Political parties claiming exemption under Section 13A
- Research associations, universities and colleges under Section 35
- Section 8 companies pursuing charitable objects
- Business trusts and investment funds, in the specified categories
The application requirement
Exemption depends on applying at least eighty-five per cent of income to the objects during the year. Where less is applied, the shortfall must be formally accumulated by filing Form 10 within the time allowed, and the accumulated amount held in the modes the Act permits.
Accumulating without filing the form, or investing outside the permitted modes, forfeits exemption on that amount. It is the single most common route by which a properly registered charity ends up with a tax demand.
The audit report comes first
Where total income before exemption exceeds the basic exemption limit, the accounts must be audited and the report filed in Form 10B or 10BB before the return.
Filing the return without the audit report having been filed first makes the return defective. The two forms serve different categories of institution, and using the wrong one is a recurring error.
What triggers loss of exemption
- Income applied for the benefit of specified persons — founders, trustees or their relatives
- Funds invested outside the modes permitted by Section 11(5)
- Business income not incidental to the objects, without separate books
- Anonymous donations beyond the permitted limit, taxed under Section 115BBC
- Failure to file the return, or to file Form 10 where income is accumulated
- Foreign contribution received without FCRA registration
How we handle it
- 1 Confirming registrations We verify the exemption registrations are current, since a lapsed registration changes the entire computation.
- 2 Computing application of income Income applied to the objects is computed and tested against the eighty-five per cent requirement.
- 3 Accumulation, where needed Where a shortfall exists, Form 10 is filed within time and the permitted investment confirmed.
- 4 Audit report The correct audit report form is identified and filed before the return.
- 5 Preparing the return ITR-7 is prepared with the exemption schedules and the computation sent for approval.
- 6 Filing and verification The return is filed and verified within the applicable deadline.
Frequently asked questions
Do we file if all our income is exempt?
Yes. Exemption removes the tax, not the filing obligation. Failure to file can itself put the exemption at risk.
What is the eighty-five per cent rule?
At least eighty-five per cent of income must be applied to the objects during the year. A shortfall can be accumulated only by filing Form 10 in time and holding the funds in permitted investments.
Which audit report applies to us?
Form 10B or Form 10BB depending on the category of institution and the level of income. Using the wrong one is a recurring error, and the report must be filed before the return.
Can a charitable trust carry on business?
Only where the business is incidental to attaining the objects and separate books are maintained. Business income outside that risks the exemption.
What happens to anonymous donations?
Anonymous donations beyond the permitted limit are taxed at a special rate under Section 115BBC, regardless of how the funds are applied.
What is not included. Government fees, statutory charges, stamp duty, court and registry fees, digital signature costs and any third-party professional charges are separate and payable at actuals. GST applies on professional fees where indicated. Prices shown are indicative and may change without notice; we confirm the total in writing before any work begins — see our terms on pricing.
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