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Entities Eligible to File ITR-7

ITR-7 is applicable for the following entities:

  • Section 139(4A): Charitable or Religious Trusts
    Charitable and religious trusts or institutions that are claiming tax exemptions.
  • Section 139(4B): Political Parties
    Political parties that have income exceeding the non-taxable limit.
  • Section 139(4C): Scientific Research Institutions
    Organizations dedicated to scientific research or charitable research.
  • Section 139(4D): Universities, Colleges, and Other Educational Institutions
    Educational institutions (universities, colleges, schools) are required to file if they claim exemptions under section 10.
  • Section 139(4E) and 139(4F): Business Trusts and Investment Funds
    Business trusts and investment funds that aren't required to file under other provisions.
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ITR 7: Eligibility and Filing Guidelines



Who Needs to File ITR-7?

The following categories of organizations need to file ITR-7:
• Charitable or Religious Trusts: Those that derive income from property held under trust for charitable or religious purposes.
• Political Parties: If the party has an income exceeding the prescribed non-taxable limits.
• Scientific Research Institutions: Institutions conducting scientific research that claim exemptions.
• Educational Institutions: Universities, schools, and other recognized educational entities.
• Business Trusts and Investment Funds: Business trusts and certain investment funds, especially those not required to file under other sections.


Filing Deadline

• Non-audited Accounts: The general due date for ITR-7 filing is July 31 of the assessment year.
• Audited Accounts: If the accounts are subject to audit, the filing deadline is October 31.
For the Assessment Year 2023-24, the original deadline of October 31, 2023, was extended to November 30, 2023 for entities requiring audit.


Penalty for Late Filing of ITR 7

1. Penalty under Section 234F:
• If the total income is below ₹5 lakh: The penalty will be ₹1,000.
• If the total income exceeds ₹5 lakh: The penalty will be ₹5,000.
2. Penalty under Section 271F:
If the return is not filed by the due date (31st October), a penalty of ₹5,000 can be imposed.
3. Interest under Section 234A:
If there is any tax payable and the return is filed late, interest will be charged at 1% per month on the outstanding tax.
4. Additional Penalty for Concealment of Income:
If the income is concealed or incorrect information is provided, a penalty of 100% to 300% of the tax sought to be evaded may be charged.



ITR-7 Structure

The ITR-7 form consists of two parts and multiple schedules.
Part A: Contains general information about the entity.
Part B: This part involves the computation of income, tax calculations, and tax payable.


Schedules Purpose
Schedule I Details of accumulated income set apart under section 11(2).
Schedule J Statement showing the investment of funds.
Schedule K Details of the trustees, founders, and managers.
Schedule LA Details of a political party.
Schedule ET Details of Electoral Trusts.
Schedule HP Income from House Property.
Schedule CG Capital Gains.
Schedule OS Income from Other Sources.
Schedule VC Voluntary Contributions.
Schedule BP Business and Profession Income.
Schedule MAT Minimum Alternate Tax (MAT) computation.
Schedule AMT Alternate Minimum Tax (AMT) computation.
Schedule SI Special Income (income charged at special rates).
Schedule IT Advance Tax and Self-Assessment Tax.
Schedule TDS Tax Deducted at Source other than salary.
Schedule TCS Tax Collected at Source.
Schedule FSI Income from outside India.
Schedule TR Tax paid outside India.
Schedule FA Details of foreign assets.


Filing Sequence

The Income Tax Department suggests the following sequence for filing ITR-7:

1. Part A (General Information)
2. Part B (Income & Tax Computation)
3. Schedules (Complete the applicable schedules)
4. Verification (Ensure the form is verified and digitally signed)
The verification part is important as it ensures the return is authenticated. For entities, the return must be signed by an authorized person, such as a trustee or manager.

Filing Procedure for ITR-7

There are several ways to file ITR-7 with the Income Tax Department:

1. Online Filing (with DSC): The preferred method is filing the return electronically using a Digital Signature Certificate (DSC).
2. Offline Filing: Alternatively, the return can be transmitted electronically, and then the taxpayer must send a signed ITR-V form to the Bangalore office.
Address: Bag No.1, Electronic City Office, Bengaluru - 560100, Karnataka.

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Audit Reports

Entities that are required to undergo an audit (such as under Section 44AB) must submit the audit report electronically along with the return. The audit report provides evidence that the financial statements have been examined by a qualified accountant.

No Annexures Required

Unlike some tax forms, ITR-7 does not require any physical annexures to be attached. However, taxpayers should ensure that their figures match the Tax Credit Statement (Form 26AS), which reflects taxes deducted at source.


Filing Instructions

• All figures relating to taxes and incomes must be rounded off to the nearest ten rupees for tax and to the nearest one rupee for income.
• Any loss or negative figure must have a minus sign (-) before the number.
• If a particular field is not applicable, write "NA" to avoid leaving fields blank.

Key Features of ITR-7




Common Mistakes to Avoid

  • Filing the wrong form: Many organizations incorrectly file forms meant for individual taxpayers.
  • Not attaching audit reports when required: If the organization is subject to an audit, ensure that the audit reports are submitted correctly.
  • Incomplete or incorrect schedules: Ensure all relevant schedules are correctly filled out; missing or incorrect information can lead to the rejection of the return.

Conclusion

Filing ITR-7 is critical for ensuring compliance for entities claiming exemptions. Given the form’s complexity and the numerous schedules involved, it’s advisable to engage a tax professional to ensure accuracy and timely filing. This also helps avoid potential issues related to tax exemption claims, audit reports, and deadlines.

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Accountants Factory Assistance for ITR-7 Filing


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