Shift from ITR-5 to ITR-7

Hey Mohd Noumaan! Here's a breakdown to help you with your query:

1. Filing ITR-7 instead of ITR-5 for Society running Schools

• ITR-5 is for firms, LLPs, AOPs, BOIs, and similar entities.

• ITR-7 is for entities claiming exemption under various sections, including Section 10(23C)(iiiad) (which applies to certain educational institutions/societies).

Since your society is running schools and is eligible for exemption under Section 10(23C)(iiiad), the correct return form is ITR-7.

Can you revise ITR-5 to ITR-7 for previous years?

• Technically, you cannot revise one form type into another. The Income Tax Department allows revision only within the same form type.

• However, you can file a fresh return for the relevant assessment years in ITR-7 before the expiry of the relevant assessment year (generally 2 years from the end of the relevant assessment year), claiming exemption under Section 10(23C)(iiiad).

• If the original ITR-5 was filed and taxes were paid, and now exemption is claimed, there might be a refund scenario or adjustment after processing.

• Whether CPC will process the return with no demand depends on their scrutiny; they may issue a notice if they find discrepancies.

2. Showing Tuition Fees under Sale of Service and GST implications

• Tuition fees for education services by an eligible institution are generally exempt from GST under Notification No. 12/2017-CT(R) and Notification No. 6/2018-CT(R).

• However, if you are showing tuition fees as “sale of service” in ITR-5, GST authorities might question this classification, but if you are genuinely exempt and have proper documentation, chances of demand notices are less.

• MOU between Income Tax and GST departments aims for data sharing, so consistency in reporting is essential.

• It's better to maintain proper documentation about exemption under GST and align your books accordingly to avoid future GST notices.

Suggested Action:

• For past years, file ITR-7 if within the time limit, claiming exemption under 10(23C)(iiiad).

• Maintain detailed records of tuition fees and exemption proofs for GST.

• Consult with a tax professional to check feasibility of refunds or rectifications.

• Consider filing a disclosure or explanation if required during scrutiny.