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CS Executive · Tax Laws and Practice · Basic Concept of Income Tax

Under the Income-tax Act, 2025, an oral trust's trustee receives Rs 6,00,000 of income for the benefit of a beneficiary. At what rate is tax charged on this income under section 308?

Income received by a trustee under an oral trust is taxed at the maximum marginal rate under section 308(1) of the Income-tax Act, 2025, irrespective of other provisions. The beneficiary's slab rate, a firm's rate or a flat rate does not apply.

  1. AAt the maximum marginal rateCorrect
  2. BAt the beneficiary's slab rate only
  3. CAt the rate applicable to a firm
  4. DAt a flat rate of 10%

Explanation

Section 308(1) says that where a trustee receives or is entitled to receive income under an oral trust, tax is charged at the maximum marginal rate irrespective of other provisions. The beneficiary's slab rate and firm rate are not applied. No flat 10% rate is prescribed.

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