Income tax liability association of person

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2015 Sir
meri association of person hai meri aop par income tax liability kya hogi .A.Y.2015-16 gross recipts 4650000. 44AD 8% 372000.00 net income contractor ship .

CA Harish Suwalka

CA Harish Suwalka (Expert)
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05 November 2015 ASSESSMENT OF AOP OR BOI (Sec. 86)

The assessment of the members of AOP or BOI depends on whether the AOP or BOI is chargeable to tax at the maximum marginal rate or at slab rate or is not chargeable to tax at all.
Tax-treatment in the three cases is discussed below:

(i) Where AOP or BOI is chargeable to tax at a maximum marginal rate or any higher rate, the share of profit of a member is exempt from tax. Thus, it is not to be included in the total income of the member [Sec. 86(a)].

(ii) Where AOP or BOI is not taxed at the maximum marginal rate but it is taxed at slab rates, the share of profit of a member from AOP or BOI is to be included in the total income of the member only for rate purposes. The member is entitled to a rebate of tax on the entire share of profit at the average rate of tax applicable to total income. [Sec. 86(b)].

(iii) Where AOP or BOI is not chargeable to tax at all, the share of profit of a member from AOP or BOI is included in his total income and he will pay tax on it. He is not entitled to any rebate of tax on such profits [Proviso to Sec. 86(b)].
The rate of 30.9% charged is the maximum marginal rate of tax and if such rate is applied then the share of profit of the member is exempt from tax

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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05 November 2015 Hi....

Section 44AD is not applicable in case of AOP Association of Persons. Therefore tax liability will be calculated under section 86 as mentioned by Mr. Harish...

Thank You....

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