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CMA Intermediate · Direct and Indirect Taxation · Income which does not form part of Total Income

An AOP has a total income on which no income-tax is chargeable. Meera is a member and her share in the AOP's income, computed under the relevant section, is Rs 80,000. How is this share treated in Meera's assessment?

Meera's Rs 80,000 share is chargeable to tax as part of her total income. Under section 310(2) of the Income-tax Act, 2025, when no tax is chargeable on the AOP's total income, the exemption for members does not apply and the share is taxed in the member's hands.

  1. AExempt, because members never pay tax on an AOP's income
  2. BChargeable to tax as part of her total incomeCorrect
  3. CExempt up to Rs 50,000 and taxable for the balance
  4. DTaxed at a flat 10% separately from her total income

Explanation

Section 310(2) provides that where no income-tax is chargeable on the total income of the AOP, the member's share is chargeable to tax as part of his total income. The exemption in section 310(1) applies only outside this exception. So Rs 80,000 is added to Meera's total income.

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