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
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 | ||||
| The procedure for assessment of AOP is as given below. The method of assessment depends on whether the shares of the members are determinate or iinderterminate, Details are as given below:
The total income of an AOP/BOI wherein the shares of the members are determinate and known shall be computed as follows :
The tax is chargeable on the total income of an AOP/BOI at the same rate as is applicable in the case of an individual. But, when the total income of any member of the AOP/BOI for the previous year (excluding his share from the AOP/BOI) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax is charged on the total income of the AOP/BOI at the maximum marginal rate (i.e. the highest slab applicable to an individual). And, where, the total income of any member of the AOB/BOI (whether or not it exceeds the maximum amount not chargeable to tax in the case of an individual) is chargeable to tax at a rate higher than the maximum marginal rate, tax shall be charged on that portion of the total income of the AOP/BOI which is relatable to such member at a higher rate and the balance of the total income of the AOP/BOI shall be taxed at the maximum marginal rate. Where shares of members are indeterminate(under Section 167B) The tax is charged on the total income of the AOP/BOI at the maximum marginal rate, which is the rate of tax (including surcharge, if any) applicable in relation to the highest slab of income in the case of an individual as specified in the Finance Act of the relevant year. However when any member is charged at a higher rate than maximum marginal rate, the income shall be taxed at a higher rate. I trust that the procedure is adequately covered above. | ||||
C A Shah D J
USA
From: Bhupendra Bhatt <bjbhatt1953@gmail.com>
To: aaykarbhavan@yahoogroups.com
Sent: Monday, 29 July 2013 4:09 AM
Subject: Re: [aaykarbhavan] Request for clerification
Status of Private Trust under the Income Tax Act - Association of Person and beneficiary its shares are determined and any beneficiary has taxable income in that case AOP (Private Trust) income is chargeable at maximum marginal rate and after paying tax by AOP (private Trust) distribute its after tax income to its beneficiaries.
Now any beneficiary who receive share from AOP (Private Trust) so my simple question is that whether such income is tax free if so pl give me section and oblige.
On 27 July 2013 23:06, Dipak Shah <djshah1944@yahoo.com> wrote:
Elaborate fully as to Private Trust and and how it is being taxed in Income Tax ?
C A Shah D J
USA
From: Bhupendra Bhatt <bjbhatt1953@gmail.com>
To: aaykarbhavan@yahoogroups.com
Sent: Saturday, 27 July 2013 5:07 AM
Subject: [aaykarbhavan] Request for clerification
Dear Allone my client is have taxable income and also received tax paid income from a private trust as per assesses such income is tax free but unable to mention section under which it is tax free. So pl quote me section and oblige.
With warm regards
Sincerely yours
Bhupendra Bhatt
Advocate
M - 09712831839
A-37 & 38, Ghanshyam Avenue, 13, Sattar Taluka Society, Opp. C. U. Shah College, Navjivan Post Office Area, Ahmedabad 380 014 Gujarat, India.
With warm regards
Sincerely yours
Bhupendra Bhatt
Advocate
M - 09712831839
A-37 & 38, Ghanshyam Avenue, 13, Sattar Taluka Society, Opp. C. U. Shah College, Navjivan Post Office Area, Ahmedabad 380 014 Gujarat, India.
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