Schedule VII explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Schedule VII to the Income-tax Act, 2025 names persons who are not liable to pay income-tax on their total income for a tax year, subject to the conditions in column C of its Table. This article covers serial numbers 1 to 24 with Notes 1 to 3: regimental funds, employee welfare funds, pension funds of insurers, statutory authorities, relief funds, universities and hospitals, mutual funds, and provident, superannuation and gratuity funds. Serial numbers 25 onwards are in our note on Schedule VII, serial numbers 25 onwards.
This explanation is as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Schedule VII is among the Schedules amended by section 126 of the Finance Act, 2026; this note explains the text as it stands. Under section 1(3) the Act came into force on the 1st April, 2026, save as otherwise provided. Later amendments, rules and notifications should be checked. For where the earlier Act's provisions on exempt persons sit in the 2025 Act, see our mapping note on exemptions and the Schedules.
The Schedule is brought in by section 11 and headed "Persons exempt from tax". Any eligible person in column B is not liable to pay income-tax on total income for a tax year, subject to the conditions in column C. Many rows carry the condition "Nil". Others need approval (serial number 2, for up to three tax years), notification (serial number 21), or a receipts test (serial numbers 17 to 19, with a five crore rupees ceiling in serial number 19). For help with an organisation's status, see our legal consultation service.
How the Schedule is framed
Any eligible person mentioned in column B of the Table shall not be liable to pay income-tax on the total income for any tax year, subject to the conditions in column C, and the expressions used have the meanings given in the Notes below the Table. The Table has three columns: A (serial number), B (eligible persons) and C (conditions).
Serial numbers 1 to 5: funds and authorities
| Serial number | Eligible persons (column B) | Conditions (column C) |
|---|---|---|
| 1 | Any regimental Fund or Non-public Fund established by the armed forces of the Union | Such Fund is for the welfare of the past and present members of the armed forces or their dependants |
| 2 | Any fund established for such purposes as may be notified by the Board for the welfare of employees or their dependants, and such employees are members of such fund | (a) Such fund (i) applies its income or accumulates it for application, wholly and exclusively to the objects for which it is established; and (ii) invests its funds and contributions and other sums received by it in the forms or modes specified in section 350; (b) such fund is approved by the Principal Commissioner or Commissioner in such manner as may be prescribed, and the approval has effect at any one time for such tax year or years, not exceeding three tax years, as specified in the order of approval |
| 3 | Any fund, by whatever name called, set up by the Life Insurance Corporation of India on or after the 1st August, 1996 or any other insurer under a pension scheme | (a) The contribution is made to such pension scheme by any person for the purpose of receiving pension from such fund; and (b) such scheme is approved by the Controller of Insurance or the Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) |
| 4 | An authority (whether known as the Khadi and Village Industries Board or by any other name) | Such authority is established in a State by or under a State Act or Provincial Act for the development of khadi or village industries in the State |
| 5 | Any body or authority (whether or not a body corporate or corporation sole) established, constituted or appointed by or under any Central Act or State Act or Provincial Act | (a) Such body or authority provides for the administration of any one or more of public religious or charitable trusts or endowments (including temples, gurudwaras, wakfs, churches, synagogues, agiaries or a mutt or other places of public religious worship) or societies for religious or charitable purposes, registered under the Societies Registration Act, 1860 (21 of 1860), or any other law; and (b) exclusion from total income as provided herein shall not be available to any trust, endowment or society being administered by such body or authority |
At serial number 2, the notified purposes and the manner of approval are not in the text consulted. The forms or modes of investment are those specified in section 350, which is not explained here. The Societies Registration Act, 1860 is another law and is quoted as printed.
Serial numbers 6 to 16: bodies and funds with the condition "Nil"
| Serial number | Eligible persons (column B) | Conditions |
|---|---|---|
| 6 | SAARC Fund for Regional Projects set up by Colombo Declaration issued on the 21st December, 1991 by the Heads of State or Government of the Member Countries of South Asian Association for Regional Cooperation established on the 8th December, 1985 by the Charter of the South Asian Association for Regional Cooperation | Nil |
| 7 | Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) | Nil |
| 8 | Central Electricity Regulatory Commission constituted under section 76(1) of the Electricity Act, 2003 (36 of 2003) | Nil |
| 9 | Prasar Bharati (Broadcasting Corporation of India) established under section 3(1) of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 (25 of 1990) | Nil |
| 10 | The Prime Minister's National Relief Fund or the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) | Nil |
| 11 | The Prime Minister's Fund (Promotion of Folk Art) | Nil |
| 12 | The Prime Minister's Aid to Students Fund | Nil |
| 13 | The National Foundation for Communal Harmony | Nil |
| 14 | The Swachh Bharat Kosh, set up by the Central Government | Nil |
| 15 | The Clean Ganga Fund set up by the Central Government | Nil |
| 16 | The Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund in respect of any State or Union territory as referred to in section 133(1)(a)(xv) | Nil |
At serial number 9 the copy consulted prints "established section 3(1)" without the word "under"; it is a printing slip and is not corrected. Donations to some of these funds are the subject of the deduction in section 133, which is a separate provision.
Serial numbers 17 to 19: universities, educational institutions and hospitals
| Serial number | Eligible persons (column B) | Conditions (column C) |
|---|---|---|
| 17 | Any University or other educational institution wholly or substantially financed by the Government | (a) It exists solely for educational purposes and not for purposes of profit; and (b) if the Government grant to such University or other educational institution exceeds such percentage of the total receipts including any donations, as may be prescribed, it shall be considered as being substantially financed by the Government during the relevant tax year |
| 18 | Any hospital or other institution wholly or substantially financed by the Government | (a) It is for the reception and treatment of persons suffering from illness or mental defectiveness, or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation; (b) it exists solely for philanthropic purposes and not for the purposes of profit; and (c) if the Government grant exceeds such percentage of the total receipts including any donations, as may be prescribed, it shall be considered as being substantially financed by the Government during the relevant tax year |
| 19 | (a) Any University or other educational institution; (b) any hospital or other institution | (a) The University or other educational institution exists solely for educational purposes and not for the purposes of profit; (b) the hospital or other institution is for the reception and treatment of persons suffering from illness or mental defectiveness, or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation; (c) the hospital or other institution exists solely for philanthropic purposes and not for the purposes of profit; (d) the aggregate of annual receipts of such University or Universities or educational institution or institutions, and hospital or hospitals or institution or institutions, does not exceed five crore rupees; and (e) where such University or other educational institution or hospital or other institution receives any anonymous donation defined under section 355(a), the provisions of section 337 (Table: serial number 1) in respect of specified income apply mutatis mutandis as they apply to a registered non-profit organisation, and such anonymous donations shall be excluded from the income on which no tax is payable |
The prescribed percentage in serial numbers 17 and 18 is not printed in the Act; it is left to the Income-tax Rules, 2026. The conditions in serial number 19 are joined by "and", so all five must be met.
Serial numbers 20 to 24: mutual funds and employee funds
| Serial number | Eligible persons (column B) | Conditions (column C) |
|---|---|---|
| 20 | A Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations made thereunder | Nil |
| 21 | Any Mutual Fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India | Such conditions as the Central Government may, by notification, specify |
| 22 | A recognised provident fund | Nil |
| 23 | An approved superannuation fund | Nil |
| 24 | An approved gratuity fund | Nil |
Recognised provident funds, approved superannuation funds and gratuity funds are the subject of Schedule XI; see our note on Schedule XI, Parts B and C.
Notes 1 to 3
- Note 1 (serial number 3): "Controller of Insurance" has the meaning assigned in section 2(5B) of the Insurance Act, 1938 (4 of 1938).
- Note 2 (serial number 4): "khadi" and "village industries" have the meanings assigned in the Khadi and Village Industries Commission Act, 1956 (61 of 1956).
- Note 3 (serial number 21): "public financial institution" has the meaning assigned in section 2(72) of the Companies Act, 2013 (18 of 2013).
These laws are other Acts, quoted as printed; check them separately.
A worked example (names and facts assumed)
Greenview Medical Trust runs a hospital that exists solely for philanthropic purposes and treats persons suffering from illness. Its annual receipts, together with those of the institutions it is aggregated with, are Rs. 4,20,00,000 (assumed). It receives an anonymous donation of Rs. 5,00,000 (assumed).
- Serial number 19(c) and (b) are met: the hospital exists solely for philanthropic purposes, and is for the reception and treatment of persons suffering from illness.
- Serial number 19(d): the aggregate of annual receipts must not exceed five crore rupees = Rs. 5,00,00,000. Rs. 4,20,00,000 does not exceed it. Condition met.
- Serial number 19(e): the anonymous donation of Rs. 5,00,000 brings in section 337 (Table: serial number 1) in respect of specified income, as it applies to a registered non-profit organisation, and the donation is excluded from the income on which no tax is payable. The Act does not state the tax rate here; see section 337 for it.
- If the receipts were Rs. 5,20,00,000 instead, condition (d) would fail, and serial number 19 would not apply.
Need help with an organisation's status?
Whether a fund, board, university or hospital falls within Schedule VII depends on how it was established, how it is financed and what its conditions say. Our legal consultation team can read the constitution documents against these rows.
Key takeaways
- Schedule VII exempts the persons in column B from paying income-tax on total income, subject to column C.
- Many rows carry the condition "Nil", including relief funds, regulators and mutual funds registered under the Securities and Exchange Board of India Act, 1992.
- A welfare fund at serial number 2 needs approval from the Principal Commissioner or Commissioner, valid for up to three tax years at a time.
- Universities and hospitals need to exist solely for education or philanthropy, not profit; serial number 19 adds a five crore rupees receipts ceiling.
- Serial number 21 mutual funds depend on conditions specified by notification.
Read next
- Schedule VII, serial numbers 25 onwards: boards, funds and institutions
- Schedule XI, Parts B and C: approved superannuation funds and gratuity funds
- Section 133: deduction for donations
- Schedule V, serial numbers 7 and 8
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.