What's new in ITR-7 for AY 2025-26? Trusts and NGOs need to know this

The income tax department has notified ITR-7 for AY 2025-26 with key changes in capital gains reporting. Here's what trusts, NGOs and institutions filing under section 139 should keep in mind

The Income Tax Department has recently notified ITR-7, particularly relevant for charitable trusts, religious institutions, political parties, research bodies, and other specified entities. With several changes introduced in the ITR forms this year, understanding the updates is crucial for accurate and timely compliance. 

 

All ITR forms notified for AY 2025-26

 

According to a report by PTI, the Income Tax Department has notified all seven ITR forms for the current assessment year. While ITR-1 (Sahaj) and ITR-4 (Sugam), used by salaried individuals and small businesses, were released on April 29, ITR-7, meant for trusts and similar entities, was officially notified on May 11.  Calculate Income Tax: Income Tax Calculator Tool

 

 

As PTI reported, ITR-7 is used by entities required to file returns under Sections 139(4A), 139(4B), 139(4C), and 139(4D) of the Income Tax Act. These include institutions claiming exemptions under Section 11, political parties, scientific and educational institutions, and news agencies.

 

Capital gains: Key change in ITR-7

 

A major update introduced this year, reported by PTI, is the rationalisation of capital gains reporting in ITR-7. Taxpayers must separately disclose gains arising before and after July 23, 2024, reflecting changes introduced in the Union Budget 2024.

 

From that date onwards, the long-term capital gains (LTCG) tax on sale of real estate has been reduced to 12.5 per cent without indexation, as against the earlier 20 per cent with indexation. The revised ITR-7 now provides the option to choose between the old and new regime, depending on the date of purchase and transfer of the asset.

 

Expert insight: More clarity, better compliance

 

Commenting on the development, Naveen Wadhwa, vice-president at Taxmann, noted that the updated ITR-7 reflects recent capital gains tax reforms, offering more clarity to institutions.