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September 26, 2020

All you need to know about filing ITR 7

by CA Shivam Jaiswal in Income Tax

All you need to know about filing ITR 7

An income tax return is basically a document that is filed as per the provisions of the Income Tax Act, reporting one’s income, profits and losses and other deductions as well as details about tax refund or tax liability. Due date for all income-tax return for FY 2019-20 is extended from July 31 2020 and 31 October 31, 2020 to November 30, 2020 to provide relief to taxpayers in view of the current COVID 19 pandemic.

The Central Board of Direct Taxes (CBDT) has notified and released various ITR forms for different purposes. If you file your return using the wrong form, then it will be considered defective. If the defect is not rectified, the return will be regarded as invalid, and the department will treat it as if the person did not file his return. Hence it is extremely important to know which ITR is applicable for which kind of assessee and for what income.

The Central Board of Direct Taxes (CBDT) has notified the income tax return (ITR) form for the assessment year 2020-21. ITR 7 is an income tax return form that is to be submitted by tax assessee’s who are required to file returns under key sub-sections of Section 139 of the Income Tax Act, 1961 such as Section 139 (4A), 139(4B), 139(4C) or 139(4D).

Who are eligible to file ITR 7?

The following are the key individuals/businesses who are a Trust, Company, Firm, Local authority, Association of Person (AOP) or Artificial Judicial Person can file income tax return using ITR-7:

ITR 7 u/s 139(4A)

Income tax filing under Section 139(4A) is for any person who receives income from property used solely/partially for charitable or religious purposes. Additionally, in order to file income tax return using ITR 7, such property must be held under a legal obligation or as a trust.

ITR 7 u/s 139(4B)

Section 139(4B) specifically applies to political parties. While political parties are exempt from taxation u/s Section 13A, this exemption applies only if they file annual returns using ITR 7. Section 13A also prescribes a basic exemption limit for political parties, thus ITR Form 7 needs to be filed only if the political party breaches this exemption limit.

ITR 7 u/s 139 (4C)

Under existing income tax rules, returns need to be mandatorily filed using ITR 7 u/s 139 (4C) by the following entities:

  1. Scientific research association
  2. News agency
  3. Association or institution referred to in Section 10(23A)
  4. Various types of institutions listed in Section 10(23B)

Filing ITR 7 u/s 139 (4D)

Under rules of Section 139 (4D) all institutions, college and university who are not covered under any other section are required to mandatory file their income tax returns using ITR Form 7.

Who are not eligible to file ITR 7?

Taxpayers who are not claiming exemption under Section 139 (4A), Section 139 (4B), Section 139 (4C) or Section 139 (4D) are not liable to file ITR-7 Form for Income Tax Return.

What is the manner of filing ITR 7?

  • ITR 7 can be filed with the Income-tax Department electronically on the e-filing web portal of Income-tax Department (www.incometaxindiaefiling.gov.in) and verified by:
  1. digitally signing the verification part, or
  2. authenticating by way of electronic verification code (EVC), or
  3. by sending duly signed paper Form ITR-V (Acknowledgment) by post to CPC
  • No document (including TDS certificate) should be attached with this return form while filing ITR-7
  • If the assessee is liable for Audit u/s 44AB and the accounts have been audited by an accountant, the details of such audit report, auditor along with the date of furnishing it to the department electronically has to be provided.

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What is the structure of ITR 7?

  • Part A – General information
  • Schedule I: Details of amounts accumulated/ set apart within the meaning of section 11(2) or in terms of third proviso to section 10(23C)
  • Schedule J: Statement showing the funds and investments as on the last day of the previous year
  • Schedule K: Statement of particulars regarding the Author(s) / Founder(s) / Trustee(s) / Manager(s), etc., of the Trust or Institution
  • Schedule LA: Political Party
  • Schedule ET: Electoral Trust
  • Schedule VC: Voluntary Contributions
  • Schedule AI: Aggregate of income derived during the year excluding voluntary contributions
  • Schedule ER: Revenue expenditure incurred during the year and amount applied to stated objects of the trust/institution during the previous year – Revenue Account
  • Schedule EC: Amount applied to charitable or religious purposes in India or for the stated objects of the trust/institution during the previous year–Capital Account [excluding amount exempt u/s 11(1A)]
  • Schedule IE-1: Income & Expenditure statement [Applicable for assessees claiming exemption under sections 10(21), 10(22B), 10(23AAA), 10(23B), 10(23D), 10(23DA), 10(23EC), 10(23ED), 10(23EE), 10(23FB), 10(29A), 10(46), 10(47) and other clauses of section 10 where income is unconditionally exempt]
  • Schedule IE-2: Income & Expenditure statement [Applicable for assessee claiming exemption under sections 10(23A), 10(24)]
  • Schedule IE-3: Income & Expenditure statement [applicable for assessee claiming exemption under sections 10(23C)(iiiab) or 10(23C)(iiiac)] (please fill up separate schedule for each institution)
  • Schedule IE-4: Income & Expenditure statement [applicable for assessee claiming exemption under sections 10(23C)(iiiad) or 10(23C)(iiiae)] (please fill up separate schedule for each institution)
  • Schedule-HP: Details of Income from House Property.
  • Schedule-CG: Capital gains
  • Schedule-OS: Income from other sources
  • Schedule-OA: General information about business and profession
  • Schedule-BP: Computation of income from business or profession
  • Schedule-CYLA: Details of income after set off of current year’s losses
  • Schedule PTI: Pass through Income details from business trust or investment fund as per section 115UA, 115UB
  • Schedule-SI: Income chargeable to tax at special rates
  • Schedule 115TD: Accreted income under section 115TD
  • Schedule FSI: Details of income accruing or arising outside India
  • Schedule TR: Summary of tax relief claimed for taxes paid outside India
  • Schedule FA: Details of Foreign Assets and Income from any source outside India
  • Schedule-SH: Shareholding of an unlisted company
  • Part B-TI: Statement of income for period ended 31st March, 2020
  • Part B-TTI: Computation of tax liability on total income
  • Tax payments:
    1. Details of payments of Advance Tax and Self-Assessment Tax
    2. Details of Tax Deducted at Source (TDS) on Income (As per Form 16A/16B/16C).
    3. Details of Tax Collected at Source (TCS)

How to fill out the verification document?

While filling up the data in the income tax return, a taxpayer should also fill up the verification. One has to furnish all the required information in the verification document. Any person making a false statement in the return or in any of the accompanying schedules shall be liable to be prosecuted under section 277 of the Income-tax Act, 1961 and on conviction be punishable under that section with rigorous imprisonment and with fine.

The key changes in the ITR-7 Form in AY 2020-21 are:

Changes in Registration details

The following four columns have been added for new provisions-

  • Whether Application for registration is made as per new provisions
  • Section under which the registration is applied
  • Date on which the application for registration/approval as per new provisions is made
  • Section of exemption opted for under the new provisions

Additional Disclosures made under Schedule PTI

  • Investment entity covered by section 115UA/115UB
  • Bifurcation of Amount as per following 3 ways:
  1. Current year income
  2. Share of current year loss distributed by Investment fund
  3. Net Income/ Loss

Removed following points from Part B (Total Income):

  • Corpus donation to other trust or institution chargeable as per Explanation 2 to section 11(1)
  • Deduction u/s 10AA

Added new point under Part B – Computation of tax liability on total income – Net tax payable on 115TD income including interest u/s 115TE (Sr.no. 12 of Schedule 115TD)

Multiple bank accounts can be selected for refund credit

  • In preceding AY 2019-20, only one bank account was allowed to be selected for refund credit.
  • In AY 2020-21, multiple bank accounts are allowed to be selected for getting the refund credit. In case multiple accounts are selected for refund credit, then refund will be credited to one of the accounts decided by CPC after processing the return.

Separate disclosure for Bank accounts in case of Non- Resident

Now there is separate disclosure for Bank accounts in case of Non- Resident who are claiming income-tax refund and not having bank account in India. Following details will be required to disclose:

  • SWIFT Code
  • Name of the Bank
  • Country of Location
  • IBAN

Filing ITR comes with a number of benefits such as claiming deductions, set off and carry forward of losses, avoid interest and penalties on tax liability and so on. It is always considered a prudent action to file one’s income tax return on time. More than any other benefit, being on the right side of law helps. It is recommended to keep the income tax department informed about one’s income and taxability. This communication is only possible when one files their ITR.

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