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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

An individual, Mr. Sameer Joshi, is a member of an AOP whose members' shares are determinate and known. His own total income for the tax year, excluding his share from the AOP, exceeds the maximum amount not chargeable to tax. Under section 311(3)(a) of the Income-tax Act, 2025, how is the AOP's total income taxed?

The AOP's total income is taxed at the maximum marginal rate. Under section 311(3)(a), when shares are determinate but any member's other income exceeds the maximum amount not chargeable to tax, the entire AOP income is charged at the maximum marginal rate.

  1. AAt the slab rates applicable to individuals on the AOP's income
  2. BAt the maximum marginal rate on the total income of the AOPCorrect
  3. COnly the share of Mr. Joshi is taxed at the maximum marginal rate and the rest at slab rates
  4. DThe AOP is exempt as the members are taxed on their shares

Explanation

Section 311(3)(a) provides that where shares are determinate and any member's own total income, excluding the AOP share, exceeds the maximum amount not chargeable to tax, tax is charged on the total income of the AOP at the maximum marginal rate. Taxing only the member's share applies to the higher-rate case in clause (b), not here.

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