Navigating Trust Fund Tax Returns: Should I Use ITR-5 or ITR-7 for Gratuity Payments?

Respected Members,

I am working in an organization where the company maintains an Income Tax-recognized Trust Fund for the payment of Gratuity to its employees, duly registered under Rule 2(1) of Part C of the Fourth Schedule to the Income Tax Act, 1961.

The Trust generates interest income by investing in Fixed Deposits and NAV-based revenue by investing its corpus with private insurance companies. The accounts are audited by auditors, and the Trustees are filing their Income Tax Returns under ITR-7 u/s. 139(4C)(ca) and claim the income as Exempted Income u/s. 10(23AAA).

Based on the above, would you please be kind enough to guide me on which ITR (ITR-5 or ITR-7) will be applicable for the above fund?

Thanks & regards,
Mahesh Khandelwal

Hello, In this case, the appropriate Income Tax Return (ITR) form for the trust fund would be ITR-7. ITR-7 is specifically designed for entities, including trusts, that are required to furnish their income tax returns under section 139(4C) of the Income Tax Act, 1961.

Applicability of ITR-7

ITR-7 is applicable for entities that fall under certain categories, such as trusts claiming exemption under section 10(23AAA), charitable or religious trusts, political parties, research associations, and news agencies. As the trust fund in question is recognized under Rule 2(1) of Part C of the Fourth Schedule to the Income Tax Act, 1961, and the trustees are filing their income tax returns under ITR-7 u/s. 139(4C)(ca) while claiming the income as exempted under section 10(23AAA) (minecraftlegame.io), it indicates that the trust falls within the scope of ITR-7.