Income Tax on Religious and Charitable Entities: FM’s ITR-7 Data Shows Rising Tax Liability Over Last Decade
ITR 7 is for entities that claim special exemptions under specific sections of the Income Tax Act including Charitable & Religious Trusts, Political Parties, Universities & Colleges..etc.
The Ministry of Finance revealed data on the income tax liability of religious and charitable entities, showing that for FY 2025–26 (up to January 2026), it has reached ₹1,041 crore. The Ministry also clarified that religious and charitable institutions in India are not given a “free pass” on taxes.
Data from the last decade shows that while these groups do get exemptions, they come with strings attached and the government is getting much stricter about making sure those rules are followed.
The government disclosed the data from ITR-7 filings, the tax forms used by charities, trusts, and religious bodies. The numbers show a massive spike in the tax actually being paid by the religious and charitable entities.
Also read: Big update from FM: Taxpayers Can Now Update ITR PostReassessment Proceedings
In 2016-17, the total tax liability for this sector was around ₹544 crore. And During the pandemic years (2019-2021), the numbers dropped to between ₹356 crore and ₹394 crore, likely due to economic disruptions.
Since then, the numbers have skyrocketed. By 2023-24, liability hit ₹816 crore, and for the current period (up to January 2026), it has reached a record high of ₹1,041 crore.
The common assumption is that if an organization is religious or charitable, it pays zero tax. However, the government clarified that these entities are only exempt if they meet specific conditions under the Income Tax Act, 1961.
They must be officially registered and prove that their money is actually being spent on charitable or religious goals. If they break these rules or use the funds for something else, their "tax-free" status disappears, and they have to pay up just like anyone else, said the Finance Ministry.
The same conditions apply to GST. While things like prasadam, religious ceremonies, and renting out temple precincts are often exempt, these benefits are limited by specific monetary thresholds, replied the Ministry to MP Anil Yeshwant Desai’s question.
ITR 7 Filing
ITR 7 is for entities that claim special exemptions under specific sections of the Income Tax Act including Charitable & Religious Trusts, Political Parties, Universities & Colleges..etc.
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