Key changes in ITR Forms for AY 2021-22 - Part 5: ITR 7

Neethi V. Kannanth | Last updated: 19 October 2021

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This article details the significant changes introduced in Income Tax Return (ITR) Form 7 for the Assessment Year 2021-22. It outlines who is eligible to use this form, which includes various entities like companies, trusts, and institutions whose income is exempt under specific sections of the Income Tax Act. Key modifications include updates to the 'General' section regarding registration details, bifurcations in Schedule BP and OS for dividend income, and changes in TDS credit claims.

Click here to read Part 1: Key Changes in ITR 1 Sahaj and ITR 2
Click here to read Part 2: Key Changes in ITR 3
Click here to read Part 3: Key Changes in ITR 4 Sugam and ITR 5
Click here to read Part 4: Key changes in ITR 6

ITR 7 Changes AY 2021-22: Key Updates Explained

Who is eligible to use Form ITR 7?

This Return Form can be used by persons including companies who are required to furnish returns under section139(4A) or section139(4B) or section139(4C) or section 139(4D). The category of persons whose income is unconditionally exempt under various clauses of section 10,and who are not mandatorily required to furnish their return income under the provisions of section 139,may use this form for filing return. An Indicative List Of such persons is given below:‐

Sl.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 lnsurance 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	lnsurance 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 welfare and economic upliftment of ex‐servicemen	Section 10(26BBB)
26	New Pension System (NPS) Trust	Section 10(44)

Key changes (as compared to ITR for AY 2020‐21)

1. In Part A General ‐ Details of registration or approval under Income Tax Act (Mandatory if required to be registered)‐ Section 12AB has been inserted in the dropdown (Application for registration is made as per new provisions)

2. In schedule BP, Income/ receipts credited to profit and loss account considered under head "other sources" has been bifurcated into 2 parts as "Dividend income" and "Other than dividend income"

3. In schedule OS,

(i) The existing drop related to "Dividend income" is bifurcated into 2 parts i.e "Dividend income [other than (ii)]" and "Dividend income u/s 2(22)(e)"

(ii) Dividend will now be taxable from Rs.1/‐ as section 115BBDA is omitted. Accordingly, Interest expenditure u/s 57(1) to earn Dividend can be claimed at sl.no.3

(iii) The existing drop down at Sl. No. 2d "115AD(1)(i)‐ Income received by an FII in respect of securities (other than units referred to in section 115AB)" bifurcated into 2 drop downs as under:‐

115AD(1)(i)‐Income being Dividend received by an FII in respect of securities (other than units referred to in section 115AB) @20%
115AD(1)(i)‐Income being other than dividend income received by an FII in respect of securities (other than units referred to in section 115AB) @20%

(iv) Further new drop downs are inserted in sl. No. 2d and Sl. No. 2e wrt "Interest referred to in section 194LC(1)" and Distributed income being Dividend referred to in section 194LBA

(v) Section 115BBDA is removed from AY 2021‐22 onwards hence corresponding drop downs are removed from sl. No. 2d and 2e of schedule OS

(vi) In existing Sl. No. 10 "Information about accrual/receipt of income from Other Sources"

Field "Dividend Income u/s 115BBDA" is changed to "Dividend income" due to finance Act changes
one more line item is inserted to capture the quarter wise break up of dividend income which is taxable at DTAA Rates. This information will be used to calculate interest u/s 234C.

4. In Schedule TDS, earlier TDS credit is allowed only if corresponding income is being offered for tax this year , however an exception is being added for TDS u/s 194N. Also, the label is amended to include form 16D for the claim of TDS

5. Annexure 1: Upload level validations table is modified wrt mapping changes and new rules

6. Annexure 2: Note on calculation of "Eligible Interest expenditure" at sl.no.3c(ii) of Schedule OS

7. Annexure 3: Note on "How to provide Bifurcation of sl.no.1(i) OS dividend income other than 2(22) (e) and 1(ii) Dividend income u/s 2(22)(e) for 234C

8. Annexure 4: Determining income for calculation of 234C

FAQ :

ITR Form 7 can be used by persons, including companies, required to furnish returns under sections 139(4A), 139(4B), 139(4C), or 139(4D). It is also for those whose income is unconditionally exempt under Section 10 and who are not mandated to file a return under Section 139.

In Schedule BP, income or receipts credited to the profit and loss account and considered under 'other sources' have been divided into two parts: 'Dividend income' and 'Other than dividend income'.

Schedule OS now bifurcates existing 'Dividend income' into 'Dividend income [other than (ii)]' and 'Dividend income u/s 2(22)(e)'. Also, dividend income is now taxable from Rs. 1 onwards as Section 115BBDA has been omitted.

Yes, in Schedule TDS, an exception is added for TDS u/s 194N, allowing TDS credit even if the corresponding income isn't offered for tax in the current year. The label has also been amended to include Form 16D for TDS claims.

The omission of Section 115BBDA means that dividend income is now taxable from Rs. 1 onwards, and corresponding dropdowns related to it have been removed from Schedule OS.