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Schedule IE- 3 – Income and Expenditure Statement AY 2026-27

‘Schedule IE-3’ in the Income Tax Return (ITR) form is applicable to institutions claiming exemption under Section 10(23C)(iiiab) or Section 10(23C)(iiiac) of the Income-tax Act, 1961. These provisions relate to educational or medical institutions that are wholly or substantially financed by the Government, where government grants exceed 50% of the total receipts, including voluntary contributions.

This schedule is required to be filled separately for each institution, clearly mentioning the nature of the institution (educational or medical), the address where its activities are carried out, the total receipts during the financial year, and the portion of those receipts that represent government grants. Additionally, it requires disclosure of the amount applied toward the stated objectives of the institution and the remaining balance that is accumulated.

The purpose of this schedule is to substantiate the institution’s eligibility for exemption based on the extent of government financing and application of income towards its charitable or educational goals.

Section 10(23C)(iiiab) and Section 10(23C)(iiiac) of Income-tax Act, 1961

Educational Institutions [Section 10(23C)(iiiab))]
Income is exempt if:

• It exists solely for educational purposes,

• It does not exist for profit, and

• It is wholly or substantially financed by the Government.

As per Rule 2BBB, financing is deemed substantial if Govt. grant > 50% of total receipts (including voluntary contributions) in the previous year.

Hospitals or Specified Institutions [Section 10(23C)(iiiac)]
Income is exempt if:

• It exists solely for philanthropic purposes,

• It does not exist for profit, and

• It is wholly or substantially financed by the Government.

Again, Rule 2BBB applies (Govt. grant > 50% of total receipts).

This schedule applies to ITR-7.