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AOP/BOI (F)

AOP/BOI

Association is Persons (AOP) means a group of people who comes together to achieve a common objective with same mind sets. Members in the AOP can be natural (Human beings) or artificial (Artificial Persons-e.g. company, LLP, etc.)

Body of Individuals (BOI) means a group of Individuals (Human Beings) who come together to achieve a common objective.

There is no separate governing body for the both the AOP and BOI, they are self-driven with natural law of justice, customs and cultures that a person usually follows in the society.

Where member’s income exceeds maximum amount not chargeable to tax (before including their share of AOP’s income) the tax is charged at the maximum marginal rate in the hands of such an AOP/BOI.

Where member’s income is less than the maximum amount not chargeable to tax, the income is taxed in the hands of AOP/BOI at tax rates applicable to individuals.

Where member’s income is higher than the maximum marginal rate (before including their share of AOP’s income), the extent of member’s share in AOP’s income shall be charged at such higher rate and the balance income shall be taxed at the maximum marginal rate.

As a taxable entity, several challenges are faced by an AOP which range from non-availability of any entity level tax benefits, disallowance of member’s salary, bonus, commission, interest etc. as an expense while computing taxable income, non-availability of depreciation on assets owned and contributed by members. This is despite the fact that AOP is given a separate entity status and is required to obtain its own PAN, maintain its books of accounts and needs to undertake other compliances at an entity level namely payment of advance tax and withholding taxes. Further, the losses incurred by AOP are not available for carry forward in the hands of its members/ contributors in a condition on dissolution of AOP. Besides this, the losses incurred and the unabsorbed depreciation of an AOP can only be carried forward in its own hands and not in the hands of its members. This may impact members who have other taxable streams of income and may end up making a loss in the business undertaken in their AOP consortium. Such members shall not be able to set off their share of loss incurred in the AOP with their other taxable incomes.

Since AOP/BOI is recognized as person under section 2(31) of the Income Tax Act 1961 it has to be assessed to tax separately hence there need a of Permanent Account Number (PAN) to be applied first for the AOP/BOI. Also, the PAN is required for operating a bank account.

To get PAN the Management of AOP/BOI shall fill Application for PAN i.e. in Form 49A and shall pay the prescribed fee along with application and shall submit such application along with only a Notarized Deed.

Now the management will carry on the business of AOP/BOI or work towards the common objective for which it was formed. AOP/BOI may or may not earn profit/loss as a result of the operations. In case the AOP / BOI is formed with an objective of carrying business and earning profits let us evaluate the taxation of such profit or loss.

All about AOP/BOI

Since AOP/BOI is recognized as person under section 2(31) of the Income Tax Act 1961 it has to be assessed to tax separately hence there need a of Permanent Account Number (PAN) to be applied first for the AOP/BOI. Also, the PAN is required for operating a bank account.

To get PAN the Management of AOP/BOI shall fill Application for PAN i.e. in Form 49A and shall pay the prescribed fee along with application and shall submit such application along with only a Notarized Deed.

Now the management will carry on the business of AOP/BOI or work towards the common objective for which it was formed. AOP/BOI may or may not earn profit/loss as a result of the operations. In case the AOP / BOI is formed with an objective of carrying business and earning profits let us evaluate the taxation of such profit or loss.

Basic

INR 1,500/-

One Time Fee

  • GST Registration
  • MSME Registration
  • Bank A/c.

Service Provide Within 7 Days

Standard

INR 11,999/-

One Time Fee

  • GST Registration
  • Shop & Establishment Registration
  • MSME Registration
  • Trade Mark Registration
  • Logo Design
  • Opening Bank A/c.

Service Provide Within 15 Days

Premium

INR 11,999/-

Yearly Fee

  • Yearly GST Compliances
  • Income Tax Return

Services Provided Before the Due Date

Frequently Asked Questions

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