Tax-Exempt Persons List (Schedule VII) under the Income Tax Act 2025

Schedule VII of the Income-tax Act, 2025 lists 49 types of persons who are not chargeable to tax on their total income, provided they meet the conditions set against each entry. The list covers armed forces funds, relief funds such as PM CARES, statutory boards, mutual funds, provident funds, and certain universities, hospitals and development finance institutions. The power comes from section 11(3). If a condition is not met in a tax year, section 11(4) says that person's income is taxed in the normal way for that year.

This is different from the exempt-income schedules (II to VI), which exempt a particular receipt, such as a scholarship or an allowance. Schedule VII exempts the person. The text below is taken from the Act as amended by the Finance Act, 2026, and I have left out any old-law section mapping that I could not verify. For the receipt-by-receipt side, see our guide to income exempt from tax under the Income-tax Act, 2025.

What is Schedule VII of the Income-tax Act, 2025?

Section 11 has two halves. Section 11(1) says income enumerated in Schedules II, III, IV, V and VI is left out of total income, subject to the conditions given there. Section 11(3) says the persons enumerated in Schedule VII are not chargeable to tax on their total income for a tax year, subject to the conditions specified in the Schedule.

Schedule VII is a table with three columns: serial number, the eligible person (column B), and the conditions (column C). Where column C says "Nil", the Schedule itself attaches no condition. Section 11(5) lets the Central Government make rules or issue notifications for the Schedule, and several entries depend on such a notification.

What happens if a Schedule VII condition is not met?

Section 11(4) is the consequence. When the conditions are not satisfied in a tax year, the income of that person is charged to tax under the Act for that tax year. The test is applied year by year. A fund that qualifies in 2026-27 and breaks a condition in 2027-28 loses the benefit for 2027-28 only, as the text reads.

Who is in the Schedule VII list? (Sl. No. 1 to 49)

The list below groups the entries by type. Each serial number is the one in the Schedule.

Group	Sl. No.	Who is listed
Armed forces and welfare funds	1, 2	Regimental or non-public fund of the armed forces; notified employee welfare fund
Pension funds	3, 41	Pension fund of LIC (set up on or after 1 August 1996) or another insurer; New Pension System Trust (established 27 February 2008)
Boards and authorities	4, 5, 7, 8, 9, 33 to 40, 42	State khadi and village industries authority; statutory bodies administering religious or charitable trusts; IRDAI; CERC; Prasar Bharati; Coffee, Rubber, Tea, Tobacco, Spices and Coir Boards; MPEDA; APEDA; notified housing, planning and regulatory bodies
Relief and national funds	6, 10 to 16	SAARC Fund for Regional Projects; PM National Relief Fund and PM CARES Fund; Prime Minister's Fund (Promotion of Folk Art); Prime Minister's Aid to Students Fund; National Foundation for Communal Harmony; Swachh Bharat Kosh; Clean Ganga Fund; Chief Minister's and Lieutenant Governor's Relief Funds
Education and health	17, 18, 19	Government-financed universities and hospitals; other universities, educational institutions, hospitals and institutions with annual receipts up to Rs 5 crore
Mutual funds	20, 21	SEBI-registered mutual funds; mutual funds set up by a public sector bank, a public financial institution, or authorised by the RBI
Provident, superannuation, gratuity, insurance funds	22 to 27	Recognised provident fund; approved superannuation fund; approved gratuity fund; the two Deposit-linked Insurance Funds (coal mines and EPF); Employees' State Insurance Fund
Agriculture and social welfare bodies	28 to 32	Agricultural produce market committee or board; corporations for Scheduled Castes, Scheduled Tribes and backward classes; minority community corporation; ex-servicemen welfare corporation; specified co-operative societies
Credit guarantee and infrastructure	43 to 48	National Credit Guarantee Trustee Company Limited; central credit guarantee funds; Credit Guarantee Fund Trust for Micro and Small Enterprises; infrastructure debt fund; infrastructure financing institution under an Act of Parliament; RBI-licensed development financing institution
International	49	New Development Bank (inserted w.e.f. 1 April 2026, subject to furnishing information in the prescribed form and manner)

Which entries have no condition, and which have strict conditions?

Column C is where the risk sits. The Schedule shows "Nil" for Sl. No. 6 to 16, 20, 22 to 27, 30, 31, 33 to 41 and 43 to 45, so no additional test applies in the Schedule text. Entries that carry real conditions are summarised here.

Sl. No.	Person	Key condition in column C
1	Armed forces fund	Fund is for the welfare of past and present members of the armed forces or their dependants
2	Employee welfare fund	Income applied wholly and exclusively for the fund's objects; investments in the modes specified in section 350; approved by the Principal Commissioner or Commissioner, with approval valid for not more than three tax years at a time
3	Pension fund of LIC or other insurer	Contributions are made to receive pension; scheme approved by the Controller of Insurance or IRDAI
4	Khadi and village industries authority	Established in a State by or under a State Act or Provincial Act for developing khadi or village industries
5	Body administering religious or charitable trusts	Administers public religious or charitable trusts or endowments; the exclusion is not available to any trust, endowment or society being administered by the body
16	CM or LG Relief Fund	As referred to in section 133(1)(a)(xv), which requires that it is the only fund of its kind in the State or Union territory, under the overall control of the Chief Secretary or Finance Department, and administered as the State Government or Lieutenant Governor specifies
17	Government-financed university or institution	Exists solely for education and not for profit; "substantially financed" depends on the Government grant exceeding a percentage of total receipts, as prescribed
18	Government-financed hospital or institution	Treats illness or mental defectiveness, solely philanthropic, not for profit; same grant test as above
19	Other university, educational institution, hospital or institution	Solely educational or philanthropic and not for profit; aggregate annual receipts do not exceed Rs 5 crore; anonymous donations are treated as for a registered non-profit organisation (section 337, Table Sl. No. 1)
21	Mutual fund of a public sector bank, public financial institution or RBI-authorised	Conditions the Central Government specifies by notification
28	Agricultural produce market committee or board	Constituted to regulate marketing of agricultural produce
29	Corporation or body for SC, ST and backward classes	Established or formed to promote their interests (column B covers a Central, State or Provincial Act corporation, or a body wholly financed by the Government)
32	Co-operative society for SC or ST	Members are only other co-operative societies formed for similar purposes; finances provided by the Government and such societies
42	Housing, urban planning and regulatory bodies	Not a company; established by a Central or State Act; notified by the Central Government
46	Infrastructure debt fund	Set up as per Central Government guidelines, by notification
47	Infrastructure financing institution	Exclusion for ten consecutive tax years from the year it is set up; institution notified by the Central Government
48	RBI-licensed development financing institution	Notified; exclusion for five consecutive tax years from set-up, extendable by notification by up to five more
49	New Development Bank	Furnish information in the prescribed form and manner

What counts as "wholly or substantially financed by the Government" (Sl. No. 17 and 18)?

The Schedule does not give a fixed figure in the text. An institution is considered substantially financed in a tax year if the Government grant exceeds such percentage of its total receipts, including donations, as may be prescribed. The percentage is in the rules, not in Schedule VII, and I have not stated one here. Check the current rule before you rely on it for a client.

How does the Rs 5 crore limit work for Sl. No. 19?

Entry 19 is the one most likely to reach small trusts and private institutions. Condition (d) looks at the aggregate of annual receipts of the university or universities or educational institution or institutions, and the hospital or hospitals or institution or institutions. Receipts are added together, so several institutions run by the same person are tested as one block against Rs 5 crore. The text says "does not exceed", so exactly Rs 5 crore passes.

Worked examples

Example 1: aggregate receipts test under Sl. No. 19 (tax year 2026-27)

Assumptions: a society runs a school and a charitable hospital in tax year 2026-27. Both are solely for education or philanthropy and not for profit. We are testing only condition (d) of Sl. No. 19. The figures are illustrative.

Step	Item	Amount (Rs)
1	Annual receipts of the school (fees and donations)	3,10,00,000
2	Annual receipts of the hospital	1,70,00,000
3	Aggregate (1 + 2)	4,80,00,000
4	Limit in condition (d)	5,00,00,000
5	Result	4,80,00,000 does not exceed 5,00,00,000, so condition (d) is met

If the hospital's receipts had been Rs 2,00,00,000, the aggregate would be Rs 5,10,00,000. That is above Rs 5 crore, condition (d) fails, and under section 11(4) the income for that tax year is charged to tax. Rs 30 lakh of extra hospital receipts, in this case, changes the outcome for both institutions.

Example 2: counting the ten years under Sl. No. 47 (set up in 2026-27)

Assumptions: an infrastructure financing institution under an Act of Parliament is set up in tax year 2026-27 and notified by the Central Government.

1. The ten consecutive tax years begin with the tax year of set-up: 2026-27 is year 1.
2. Year 10 is 2026-27 plus 9 years = 2035-36.
3. Exclusion is therefore available for tax years 2026-27 to 2035-36 (provided the notification is in force). From 2036-37 onwards the entry gives no cover.

For Sl. No. 48, a development financing institution set up in 2026-27 gets five years, 2026-27 to 2030-31. If the Central Government extends the period by the maximum five more years by notification, the end date moves to 2035-36, subject to the notified conditions.

Example 3: Ravi's trust and the government-financed test (scenario)

Ravi chairs a college run by a trust. The state government gives the college a yearly grant. The college wants to claim Sl. No. 17. The question is whether the grant is above the prescribed percentage of total receipts, donations included. Ravi's accountant works out grant divided by total receipts for each tax year and compares it to the percentage in the rules. In a year when donations jump and the grant share dips below the percentage, the college is not "substantially financed" for that year, and Sl. No. 17 is not available for it in that year. The college may then look at Sl. No. 19 or at registration as a non-profit organisation instead; our guide to registration of trusts and non-profit organisations covers that route.

Example 4: Meena's employee welfare fund (scenario)

Meena is the finance head of a manufacturing company. The company sets up a welfare fund for employees and their dependants, notified by the Board for this purpose. To use Sl. No. 2 she needs three things at once: income applied only to the fund's objects, investments only in the modes allowed by section 350 (the modes sit in Schedule XVI), and an approval from the Principal Commissioner or Commissioner. That approval covers a maximum of three tax years at a time, so she calendars the renewal. If the fund puts money in an instrument outside the permitted modes, the condition fails for that year and section 11(4) applies.

Common mistakes

• Treating "Nil" as automatic for everyone. "Nil" means the Schedule adds no further condition. The person must still be exactly the one described in column B, for example a recognised provident fund or an approved gratuity fund, not just any fund.
• Forgetting that approval has a time limit. Under Sl. No. 2, approval is for not more than three tax years at a time. Missing the renewal can break the exemption.
• Testing receipts per institution under Sl. No. 19. The Rs 5 crore limit is on the aggregate of annual receipts of all such institutions.
• Ignoring the notification requirement. Sl. No. 2, 21, 42, 46, 47 and 48 rely on a Central Government or Board notification. Without it the entry does not apply.
• Assuming a body under Sl. No. 5 shelters the trusts it administers. Column C (b) says the exclusion is not available to the trust, endowment or society being administered by that body.
• Mixing up person-level and income-level exemption. Schedule VII removes the person from charge on total income. Schedules II to VI exempt specific income only.

Quick reference: Schedule VII time limits and thresholds

Item	Limit	Sl. No.
Approval validity for employee welfare fund	Not more than 3 tax years at a time	2
Aggregate annual receipts of institutions	Not more than Rs 5 crore	19
Exclusion period, infrastructure financing institution	10 consecutive tax years from set-up	47
Exclusion period, development financing institution	5 consecutive tax years from set-up; up to 5 more by notification	48
Pension fund set up by LIC or insurer	On or after 1 August 1996	3
New Development Bank	Inserted w.e.f. 1 April 2026; prescribed information must be furnished	49

Where this is in the Act

• Section 11(1) and (2): income in Schedules II to VI not included in total income; charged if conditions fail.
• Section 11(3) and (4): persons in Schedule VII not chargeable to tax; charged if conditions fail.
• Section 11(5): rules and notifications for Schedules II to VII.
• Schedule VII, Sl. No. 1 to 49, with Notes 1 to 6 (Controller of Insurance, khadi, public financial institution, Scheduled Castes and Scheduled Tribes, minority community, ex-servicemen).
• Section 133(1)(a)(xv): conditions for the Chief Minister's and Lieutenant Governor's Relief Funds.
• Section 350 and Schedule XVI: permitted modes of investment.
• Section 355(a) and section 337 (Table Sl. No. 1): anonymous donations and their treatment for entry 19.

Keeping track of exempt-entity clients

For a CA firm, the practical work is a yearly checklist per client: which Schedule VII entry applies, whether the receipt limit or approval date is close, and whether a notification is still in force. Finexo's practice management software can hold these renewal dates and receipt reviews as recurring tasks against each client. It does not decide eligibility for you.

This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026). It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.