All the trusts are mandatorily required to file the Income Tax Return every year as per the Income Tax Act, 1961. Trusts can file either ITR-5 or ITR-7 subject to its applicability.
In this blog we will discuss about the applicability of ITR-7 and key changes made for A.Y. 2021-22.
What Is ITR 7 Form?
ITR 7 means Income Tax Return Form 7 that is required to be filed by prescribed persons.
Who can use the Income Tax Return-7 form?
Income Tax Return-7 (ITR-7) form can be used by persons including section 25 or section 8 companies who are required to furnish return under section 139(4A) of income tax act or section 139(4B) or section 139(4C), or section 139(4D) of the same act.
Who cannot use ITR 7 form?
Income Tax Return (ITR-7) Form, No other Category of the taxpayer.
Applicability of ITR – 7
As we are aware of the fact that a trust can file either ITR – 5 or ITR – 7, subject to type of trust.
According to Income Tax Act, 1961 provisions, ITR-5 is required to be filed by Cooperative Society, Estate of Deceased, Estate of Insolvent, Business Trust and Investment Fund and Local Authority whereas the trusts who are mandatorily required to file ITR within the provisions of Section 139(4A), 139(4B), 139(4C) or 139(D) of the Income tax Act 1961, shall file ITR-7.
E – Filing of Audit Report before filing ITR – 7
According to Income Tax Act, 1961 provisions, ITR-5 is required to be filed by Cooperative Society, Estate of Deceased, Estate of Insolvent, Business Trust and Investment Fund and Local Authority whereas the trusts who are mandatorily required to file ITR within the provisions of Section 139(4A), 139(4B), 139(4C) or 139(D) of the Income tax Act 1961, shall file ITR-7.
Key points to remember while filing Income Tax Return form 7
The category of persons whose income is unconditionally exempt under various clauses of section 10, and who is not mandatorily required to furnish their return of income under the provisions of section 139, may use ITR 7 for filing return of income. An indicative list of such persons is given below:-
Category of Persons
| S. No. | Category of Persons | Exempt under section |
| 1. | Local authority | Section 10(20) |
| 2. | Regimental Fund or Non-public Fund established by the Armed forces of the Union | Section 10(23AA) |
| 3. | Fund, by whatever name called, set up by the Life insurance Corporation (LIC) of India on or after 1st August 1996, or by any other insurer | Section 10(23AAB) |
| 4. | Authority (whether known as the Khadi and Village Industries Board or by any other name) | Section 10(23BB) |
| 5. | Body or Authority | Section 10(23BBA) |
| 6. | SAARC Fund for Regional Projects set up by Colombo Declaration | Section 10(23BBC) |
| 7. | Insurance Regulatory and Development Authority (IRDA) | Section 10(23BBE) |
| 8. | Central Electricity Regulatory Commission | Section 10(23BBG) |
| 9. | Prasar Bharati | Section 10(23BBH) |
| 10. | Prime Minister’s National Relief Fund | Section 10(23C)(i) |
| 11. | Prime Minister’s Fund (Promotion of Folk Art) | Section 10(23C)(ii) |
| 12. | Prime Minister’s Aid to Students Fund | Section 10(23C)(iii) |
| 13. | National Foundation for Communal Harmony | Section 10(23C)(iiia) |
| 14. | Swachh Bharat Kosh | Section 10(23C)(iiiaa) |
| 15. |
Clean Ganga Fund |
Section 10(23C)(iiiaaa) |
| 16. | Provident fund to which the Provident Funds Act, 1925 applies | Section 10(25)(i) |
| 17. | Recognized Provident Fund | Section 10(25)(ii) |
| 18. | Approved Superannuation Funds | Section 10(25)(iii) |
| 19. | Approved Gratuity Fund | Section 10(25)(iv) |
| 20. | Other funds referred to in sub-clause (v) of section 10(25) | Section 10(25)(v) |
| 21. | Employees’ State Insurance Fund | Section 10(25A) |
| 22. | Agricultural Produce Marketing Committee | Section 10(26AAB) |
| 23. | Corporation, body, institution, or association established for promoting interests of members of Scheduled Castes or Scheduled Tribes or backward classes | Section 10(26B) |
| 24. | Corporation established for promoting interests of members of a minority community | Section 10(26BB) |
| 25. | Corporation established for the welfare and economic upliftment of ex-servicemen | Section 10(26BBB) |
| 26. | New Pension System (NPS) Trust | Section 10(44) |
The Charitable Company incorporated under section 25 of Companies Act, 1956, or under section 8 of Companies Act, 2013 shall use ITR 7.
Changes in Income Tax Return form 7 (ITR-7) for A.Y 2021 – 22 (As Compared to A.Y. 2020 – 21)
More registration details are required
The following details are required to be furnished–
- Confirm, “Whether as per new provisions, application for registration has been made”.
- Confirm, “Under which section registration has been applied for”.
- Confirm the Date on which the application for registration/approval has been made.
- Confirm the Section under new provisions opted for exemption.
Taxability of Dividend Income received from Companies, in the hands of recipient, from A.Y. 2021-22
As per the provisions of Section 115-O of the Income tax Act, 1961, the Dividend Income received by the shareholders was taxable in the hands of the Company itself. However from A.Y. 2021-22, the dividend income shall be taxable in the hands of the shareholders only.
As per the provisions of section 57 of Income tax Act, 1961, the taxpayer can claim deduction of Interest Expenses incurred for earning such dividend income, up-to the prescribed limit.
The parallel changes have been made in the Schedule OS of the ITR Form.
Multiple bank accounts can be selected for refund credit
Earlier, taxpayer could select only one account for credit of refund. However, from financial year, 2020 – 21, taxpayer can select multiple bank accounts to get refund.
Conclusion
We hope all of your doubts related to what ITR 7 means, how to fill ITR 7 and other topics related to ITR 7 Filing are answered. In case of any query, contact your Trustworthy Advisors Manthan Experts.
Knowledge Source:
Income Tax Return Form for Companies – ITR-6
Income Tax Return form for Salaried Individuals ITR -1
Things to remember while filing ITR-5 Form for F.Y 2019-20 / A.Y 2020-21