The Central Board of Direct Taxes (CBDT) has released the updated Income Tax Return Form 7 (ITR-7) for the assessment year 2025-26 (financial year 2024-25). The new form, notified in line with amendments introduced in the Finance Act, 2024, applies to entities such as charitable or religious trusts, political parties, research institutions, and universities, among others.
Who Should File ITR-7?
Entities required to furnish returns under sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income Tax Act must use ITR-7. These include:
- Charitable and religious trusts claiming exemptions under Section 11
- Political parties under Section 139(4B)
- Scientific research bodies, news agencies, colleges, universities, and other notified institutions
- Entities claiming exemptions under sections like 10(23C) and 10(21)
These organizations typically operate on a not-for-profit basis and avail of exemptions under specific provisions of the law.
What’s New in ITR-7 for AY 2025-26?
The form incorporates several key updates:
- Capital Gains Segregation Based on Date
As per the amendments introduced in the Finance Act, 2024, a major update has been made to Schedule-Capital Gains in ITR-7. Taxpayers are now required to report capital gains separately for transactions executed before and after July 23, 2024 — the date from which the revised capital gains rules came into force. This change is expected to affect how indexation and tax calculations are carried out. - Buyback Loss Adjustments
Another notable update is in the treatment of capital loss arising from share buybacks. Effective from October 1, 2024, if a shareholder reports dividend income under ‘income from other sources,’ they will now be permitted to claim the corresponding capital loss on the buyback of shares. This revision addresses a long-pending issue related to the double taxation of such transactions. - Section 24(b) Reporting for Interest on Housing Loans
New fields have been added to capture deductions claimed under Section 24(b), improving disclosure on interest paid for house properties owned by these entities. - TDS Section Code Inclusion
Entities will now need to specify the TDS section code in the Schedule-TDS to enhance verification of tax deductions.
Filing Process
Filing of ITR-7 for AY 2025-26 is yet to be enabled. Once active, the return must be submitted electronically via the Income Tax Department’s e-filing portal: incometax.gov.in. Use of digital signature is mandatory for political parties and entities that require audited financial statements.
This update comes as part of the government’s continued efforts to streamline compliance and improve transparency in tax reporting for exempt organizations.