Regarding to Tax Calculation of AOP

This query is : Resolved

Rahul (Querist)
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16 January 2020 1. whether AOP has Liable for Basic exemption Limit or Maximum rate of tax(30%)? when Share of members are specified.
2. when AOP is chargeable at maximum rate then Income from AOP of members individually is exempt or not?
3. when AOP is Liable for basic exemption Limit then Income from AOP of members individually exempt or not?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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29 May 2020 What is the tax rate?
A. Income-tax:
Tax liability of AOP/BOI depends on whether or not share of members of AOP/BOI are known.

1) Where share of members are known
Where individual shares of members in AOP/BOI are known then tax liability of AOP/BOI shall be determined as under:

a. Where income of none of the members exceeds the maximum amount which is not chargeable to income-tax (i.e., basic exemption limit)
In this case income of AOP/BOI shall be taxable at a rate applicable to an individual.
But if total income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then income of AOP/BOI shall be chargeable to tax as follows:
- Portion of income attributable to such member shall be taxable at such high rate as applicable to that member.
- Balance portion of income shall be taxable at the maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable) .
b. Where income of any member of AOP/BOI exceeds the maximum amount which is not chargeable to income-tax (i.e., basic exemption limit)
In this case income of AOP/BOI shall be taxable at maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable).
But if total income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then income of AOP/BOI shall be chargeable to tax as follows:
- Portion of income attributable to such member shall be taxable at such high rate as applicable to that member.
- Balance portion of income shall be taxable at the maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable).
2) Where share of members are not known
In such a case income of the AOP/BOI shall be taxable at maximum marginal rate (i.e., 30% plus surcharge and HEC as applicable). But if income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then total income of AOP/BOI shall be chargeable to tax at such higher rate of tax.

For the purposes of this section, the individual shares of the members of an AOP or BOI in the income of AOP/BOI shall be deemed to be indeterminate or unknown if such shares are indeterminate or unknown on the date of formation of such AOP or BOI or at any time thereafter.

B. Alternate Minimum Tax:
Tax payable by AOP/BOI cannot be less than 18.5 per cent (increased by Surcharge and HEC) of "adjusted total income" as per section 115JC . However, provisions related to alternate minimum tax shall not apply to an AOP or BOI whose adjusted total income does not exceed twenty lakh rupees.

Note:

Surcharge: The amount of income-tax shall be further increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

Health and education cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four per cent of such income-tax and surcharge.

How to pay tax?
Taxes can be paid in any of following mode:
1) Physical Mode - Payment by furnishing the hard copy of the challan at the designated bank
a. Download Challan ITNS 280
b. Tax Payment-Locate Bank Branch
2) e-payment mode i.e. making payment by using the electronic mode
See tutorial
Click to e-Pay the tax
Who is supposed to pay Advance Tax?
How is advance tax calculated and paid?

Note:
E-payment is mandatory for an AOP/BOI who is liable to get its accounts audited under section 44AB of the Income-tax Act, 1961.

https://www.incometaxindia.gov.in/Pages/i-am/aop.aspx?k=Tax%20Payment
http://incometaxmanagement.com/Pages/Tax-Ready-Reckoner/Assessment/AOP/2-Computation-of-AOPs-Total-Income.html
https://taxguru.in/income-tax/income-tax-rates-assessment-year-2019-20.html
http://incometaxmanagement.com/Pages/Tax-Ready-Reckoner/Assessment/AOP/How-to-find-out-Tax-Liability-of-an-AOP-BOI.html
https://www.puneicai.org/wp-content/uploads/Taxability-of-AOP-BOI-Local-Govt.-Trust-by-CA.-Anil-Sathe-1.pdf