ITR 7 is an Income Tax Return Form for some specified persons. Specified persons are mentioned in sections 139(4A), 139(4B), 139(4C), and 139(4D) of the Income-tax Act, 1961 (or ‘the Act’). The persons could be firms, companies, local authorities, the Association of Persons (AOP), or Artificial Juridical Persons (AJP). The brief of the above sections is as follows:
Section | Applicable to |
139(4A) | Individual or HUF - Income from property held under trust or other legal obligation wholly or partly for charitable or religious purpose or income from voluntary contributions as per 2(24) (iia) of the Act |
139(4B) | Political party |
139(4C) | research association, news agency, specified association or institution, specified person, institution for development of khadi or village industries, university or other educational institution or any hospital or other medical institution, mutual fund, securitisation trust, Investor Protection Fund, Core Settlement Guarantee Fund, specified boards (Coffee Board, Tea Board, Coir Broad, etc), body or authority or Board or Trust or Commission established for the benefit of general public, venture capital company or venture capital fund, trade union infrastructure debt fund |
139(4D) | Specified university, college, or institution |
Other than the above, if person’s income is exempt under Section 10 without any conditions and is not mandatorily required to furnish a return of income, can use this ITR 7 for filing a return.
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Some Common Discrepancies in ITR 7 Filing, How to Correct Them and How to Avoid Them
1. Filing of Form 10B/10BB before return filing
Form 10B and Form 10BB are audit reports applicable to charitable funds, universities, educational, medical institutions, etc depending on the amount of total income. These forms contain some general information, details of income applications, donation details, etc. These forms should be filed before submitting a return of income.
2. Amount to be tallied with audit report in Form 10B/Form 10BB
It is necessary to ensure that the amounts filled in ITR 7 are same as Form 10B/10BB. Some of the amounts that should match are:
- Applied for purpose other than the objects of the trust or institution;
- Borrowed fund;
- Corpus;
- Anonymous donation;
- Income of earlier previous years up to 15% accumulated or set apart; etc.
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3. Exemption u/s 13A
Section 13A of the Act provides for certain exemptions to political parties. Income from house property, income from other sources, income from capital gains, and income of voluntary contributions from individuals are exempt for a political party. To claim this exemption, a political party should be registered under the Representation of the People Act, 1951.
To claim an exemption under section 13A in ITR 7, it is mandatory to
- file return within the due date;
- provide registration number and date of registration;
- submit the report under section 29C(3) of the Representation of the People Act, 1951 and provide the date of submission in Schedule LA;
- maintain books of accounts and other documents in Schedule LA;
- accounts are audited by an accountant in Schedule LA;
- ensure that the sub-status of assessee is not a public charitable trust, etc
Else the return may be a defective return.
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4. The amount spent by Electoral Trust on administrative and management functions should be within limits
In Schedule ET of ITR 7, the amount spent on administrative and management functions has to be mentioned. Please ensure that the amount is not more than 5% of total contributions. Also, the maximum amount allowed is Rs.5 lakhs in the first year of incorporation, and Rs. 3 lakhs in the subsequent years.
5. Date of registration
Schedule PI of ITR 7 asks for "Details of registration/provisional registration or approval under the Income-tax Act". Please make sure that this date is after the date of incorporation but before filing of return of income.
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6. Section of return filing to correspond with relevant exemption section
For example: A return under section 139(4A) is filed when there is an exemption under section 11 of the Act, return under section 139(4B) is filed when there is exemption under section 13A/13B of the Act. Take caution to select the correct section for proper return filing.
Validation rules for ITR 7 can be accessed here.
To avoid mistakes in return, you may preview your return and recheck all the Schedules. Also, ensure to file the return a few days before the due date. This will help you with some buffer time for rechecking and appropriately filing the return.
There is an option to revise a return before the prescribed due date. In case you find an error in your return, you can revise the return with the correct details. This revised return will be considered as your final return.
In some cases, the Income Tax Department (ITD) may process your return. ITD may send you a notice under section 143(1) of the Act. If you find any errors in the return, you can raise a rectification request online on the efiling portal. Please note only mistakes that are apparent from records can be corrected using a rectification request. In other cases, you may use the revised return option.
Also Learn About FileAbhi's Income Tax Filing Services
FAQ Section: Discrepancies in ITR 7 Filing
1. Who can file ITR 7?
ITR 7 is to be filed by persons mentioned under sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income-tax Act, 1961. Examples of such persons include political parties, charitable trusts, etc.
2. What is the due date to file ITR 7?
The due date to file ITR 7 is 31st July of the assessment year unless extended. The due date is 31st October of the assessment year unless extended if the person is required to get their accounts audited.
3. What is the late filing penalty for ITR 7?
The penalty for late filing of ITR 7 is Rs. 5,000 assuming the return is filed before 31st December of the assessment year. If the income is up to Rs. 5 lakhs, then the maximum penalty is Rs. 1,000.
4. Can we file ITR 7 offline?
Yes, ITR 7 can be filed offline using the utility. The detailed process is given on this link.