ITR 7 corpus donation

Hi Ananthu! The treatment of corpus donations in ITR-7 and its effect on taxable income can be confusing. Here's a clear explanation:

Corpus donations are typically capital receipts and not treated as income for tax purposes.
They are not taxable because they are contributions towards the capital fund of the trust/organization.
Therefore, corpus donations should not increase taxable income.

In ITR-7, there are separate sections for:
- Voluntary contributions - Corpus Fund
- Voluntary contributions - Non Corpus Fund
Corpus donations are entered under Voluntary Contribution - Corpus Fund.
Sometimes, the system shows corpus donations under "expenditure disallowed" to ensure it is not treated as revenue income or revenue receipt.
This can be confusing because the system might display it as disallowed expense but it does not add it to taxable income.

This is to prevent the corpus donation from being deducted again as an expense.
It’s an accounting mechanism to neutralize the effect of corpus donations on taxable income.
The system shows corpus funds as a disallowance on the expenditure side to ensure no impact on net taxable income.

Aspect	Treatment in ITR-7
Corpus Donation	Not taxable; capital receipt
Enter under	Voluntary Contribution - Corpus Fund
Displayed as	Disallowed expenditure to neutralize its impact
Effect on Taxable Income	Corpus fund not added to taxable income

Corpus donations are NOT added to taxable income.
The system's display under "disallowed expenses" is an internal adjustment, not increasing your tax liability.
Make sure you enter corpus donations correctly under the specified head in ITR-7.