Returns and Forms Applicable for Local Authority for AY 2026-27

Disclaimer: The content on this page is only to give an overview / general guidance and is not exhaustive.

For complete details and guidelines, please refer to the Income Tax Act,1961 Forms, Rules and Notifications.

As per Section 2(31) Person for the purpose of Income Tax Act,1961 includes inter alia a Local Authority.

For the purpose of section 10(20) which provides for exemption of income of Local Authority subject to certain conditions, the expression Local Authority means—
(i) Panchayat as referred to in clause (d) of Article 243 of the Constitution; or
(ii) Municipality as referred to in clause (e) of Article 243P of the Constitution; or
(iii) Municipal Committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; or (iv) Cantonment Board as defined in Section 3 of the Cantonments Act, 1924 (2 of 1924);

1. ITR-5

This form can be used by a person being a:

Firm
Limited Liability Partnership (LLP)
Association of Persons (AOP)
Body of Individuals (BOI)
Artificial Juridical Person (AJP) referred to in clause (vii) of Section 2(31) of Income Tax Act,1961
Local Authority referred to in clause (vi) of Section 2(31) of Income Tax Act,1961
Representative Assessee referred to in Section 160(1)(iii) or (iv) of Income Tax Act,1961
Cooperative Society
Society registered under Societies Registration Act, 1860 or under any other law of any State,
Trust other than Trusts eligible to file Form ITR-7
Estate of Deceased Person
Estate of an Insolvent
Business Trust referred to in Section 139(4E) of Income Tax Act,1961
Investment Fund referred to in Section 139(4F) of Income Tax Act,1961

Note: However, a person who is required to file the Return of Income u/s 139(4A) or 139(4B) or 139(4D) of Income Tax Act,1961 shall not use this form.

2. ITR-7

Applicable for Persons including Companies who are required to furnish returns u/s 139 (4A) or Section 139 (4B) or Section 139 (4C) or Section 139 (4D) of Income Tax Act,1961

139(4A) –
Income derived from Property held under Trust wholly / in part for charitable or religious purposes

139(4B) –
Chief Executive Officer of every Political Party

139(4C) –
Various entities like Research Association, News Agency, etc. mentioned in Section 10 of Income Tax Act,1961

139(4D) – University, College or other Institution referred in Section 35 of Income Tax Act,1961

Note: The category of persons whose income is unconditionally exempt under various clauses of Section 10,(Income Tax Act,1961) and who are not mandatorily required to furnish their return of income under the provisions of Section 139 of Income Tax Act,1961, may use this form for filing return (for instance - Local Authority)

Forms Applicable as per Income Tax Act,1961

Form 26 AS

AIS (Annual information Statement)

Provided by:

Income Tax Department (It is available on e-Filing Portal:

Details provided in the form:

Tax Deducted / Collected at Source.

Provided by:

Income Tax Department (It can be accessed after logging on to Income Tax e-Filing portal)

Go to e-filing portal > login > AIS

Details provided in the form:

Tax Deducted / Collected at Source
SFT Information
Payment of taxes
Demand / Refund

Other information (like Pending/Completed proceedings, GST Information, Information received from foreign government etc)

Note: Information regarding (Advance Tax/SAT, Details of refund, SFT Transaction, TDS u/s 194 IA,194 IB,194M, of Income Tax Act,1961: TDS defaults) which were available in 26AS are now available in AIS.

Submitted by:	Details provided in the form
Taxpayer who is required to get their accounts audited by an Accountant u/s 44AB (Income Tax Act,1961) . To be furnished one month before the due date for furnishing the return of income under sub-section (1) of section 139 of Income Tax Act,1961.	Report of Audit of Accounts and Statement of Particulars required to be furnished u/s 44AB of the Income Tax Act, 1961

Submitted by	Details provided in the form
Taxpayer who is required to get his accounts audited by an Accountant u/s 44AB (Income Tax Act,1961). . To be furnished one month before the due date for furnishing the return of income under sub-section (1) of section 139 of Income Tax Act,1961.	Report of Audit of Accounts and Statement of Particulars required to be furnished u/s 44AB of the Income Tax Act, 1961

Provided by	Details provided in the form
Deductor to Deductee	Form 16A is a Tax Deducted at Source (TDS) Certificate issued quarterly that captures the amount of TDS, Nature of Payments and the TDS payments deposited with the Income Tax Department.

Tax Slabs for Local Authority for AY 2026-27

For the AY 2026-27, a Local Authority is taxable at 30%.

Surcharge, Marginal Relief and Health and Education cess

What is Surcharge?

Surcharge is levied on the amount of income tax at following rates if total income exceeds specified limits:

12% if taxable income exceeds ₹ 1 crore

What is Marginal Relief?

Marginal relief is available from the surcharge in the following manner:

In case Net Income exceeds ₹ 1 crore – the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of ₹ 1 crore by more than the amount of income that exceeds ₹ 1 crore

What is Health and Education cess?

Health and Education cess – @ 4% shall also be paid on the amount of income tax plus surcharge (if any).

Exemption / Income not included in total income u/s 10(20) of Income Tax Act,1961:
The income of a Local Authority which is chargeable under the head Income from House Property, Capital Gains or Income from Other Sources or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area.

Investments / Payments / Incomes on which Tax Benefit is available

Tax deductions specified under Chapter VI-A of the Income Tax Act,1961

Section 80G

Deduction towards donations made to certain funds, charitable institutions, etc.

Donation are eligible for deduction under the below categories:

Subject to qualifying limit

100% of donation made

50% of donation made

Without any limit

100% of donation made

50% of donation made

Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹ 2000/-.

Section 80GGA

Deduction towards donations made for Scientific Research or Rural Development.

Donation are eligible for deduction under the below categories:

Research Association or University, College or other Institution for

Scientific Research
Social Science or Statistical Research

Association or Institution for

Rural Development
Conservation of Natural Resources or for afforestation

PSU or Local Authority or an association or institution approved by the National Committee for carrying out any eligible project

Funds notified by Central Government for:

Afforestation
Rural Development

National Urban Poverty Eradication Fund as setup and notified by Central Government

Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹ 2000/- or if gross total income includes income from Profit / Gains of Business / Profession.

Section 80JJA

Deduction in respect of Profits and Gains from Business of Collecting and Processing of Biodegradable Waste (subject to certain conditions)

100% of profits for 5 AYs where the Gross Total Income of an Assessee includes any Profits and Gains derived from the Business of Collecting and Processing or treating of Biodegradable Waste

Section 80JJAA

Deduction in respect of Employment of New Workers / Employees, applicable to Assessee to whom Section 44AB Income Tax Act,1961 applies (subject to certain conditions)

30% of additional employee cost for 3 AYs, subject to certain conditions

Section 80IA

Undertaking engaged in Industrial Parks (any undertaking), and any Power Undertaking shall be entitled to claim deduction (subject to certain conditions)	100% of profit for 10 consecutive AYs falling within a period of 15 AY
	(No deduction shall be allowed if development, operation, etc. started after specified dates for specified business)

Section 80IAB

Deduction in respect of Profits and Gains by an Undertaking or an Enterprise engaged in Development of Special Economic Zone (subject to certain conditions)

100% of profit for 10 consecutive AY out of 15 AY beginning from the year in which a Special Economic Zone has been notified by the Central Government

No deduction to an assessee, where the development of Special Economic Zone begins on or after 1st April 2017

Section 80IB

Deduction towards Profits and Gains from specified industrial undertakings other than infrastructure development undertakings- 100% of profit for 10 years from the AY in which it is approved by prescribed authority (if approved after 31st March 2000 but before 1st April 2007).

The deduction under this section is available to an assessee whose Gross Total Income includes any Profits and Gains derived from the business of:

Industrial Undertaking including an SSI in J&K

Commercial Production and Refining of Mineral Oil

Processing, Preservation and Packaging of Fruits or Vegetables, Meat and Meat Products or Poultry or Marine or Dairy Products

Integrated Business of Handling, Storage and Transportation of Food Grains

(subject to certain conditions)

100% / 25% of profit for 5 / 10/7 years as per conditions specified for different types of undertakings

Section 80IC

Deduction in respect of certain Undertakings in Himachal Pradesh, Sikkim, Uttaranchal and North-Eastern states (subject to certain conditions)

100% of profits for first 5 AY and 25% (30% for a Company) for next 5 AY to manufacture or produce specified article or thing

Local Authority for AY 2026-2027

Returns and Forms Applicable for Local Authority for AY 2026-27

Tax Slabs for Local Authority for AY 2026-27

Investments / Payments / Incomes on which Tax Benefit is available