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AOP/BOI & HUF

AOP/BOI

Association is Persons (AOP) means a group of people who comes together to achieve a common objective of entity to be registered with the same mindsets. Anybody who can be members of the AOP either can be a natural person (Individual) or artificial (Artificial Persons-e.g. company, LLP, etc.)

Body of Individuals (BOI) means any class of Individuals (Human Beings) who come together to achieve a common purpose/objective.

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

 

HUF

HUF means Hindu Undivided Family. This is being created for the purpose of tax saving of the family member by pooling assets into HUF. HUF is taxed separately from its members. A Hindu family can also form a HUF through its members. same like Buddhists, Jains, and Sikhs can also form a HUF through its member. HUF has its own PAN has a different identity from individuals and files tax returns independent of its members.

Benefit BOI/AOP & HUF

Where member’s income exceeds the 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 a 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.

HUF

  • It is formed only the tax saving of family members. (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.

The disadvantage of AOP/BOI & HUF

As a taxable entity, a lot of challenges are faced by an AOP that consequence from non-availability of any entity-level tax benefits, disallowance of member’s salary, bonus, commission, interest, etc. and also there is non -availability of depreciation on assets owned and contributed by members as an expense while computing taxable income. AOP is a separate entity that is and is required to obtain its own PAN, maintenance of its books of accounts, and needs to consider the compliances at an entity level like payment of advance tax, TDS, & filingITR.

Further, the losses & unabsorbed depreciation incurred by AOP are not available for carrying forward in the hands of its members/ contributors in a condition on the dissolution of AOP.

if a member has other taxable income and may end up making a loss in their AOP, such member not able to set off their share of loss incurred in the AOP with other taxable income.

The Disadvantages of HUF

All Members has an equal right

Partition

Joint family system losing relevance

HUF continues to be file ITR till partition.

Legal Requirements.

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

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

Now the management will carry on the business of AOP/BOI & HUF for work towards the common objective for which it was formed. AOP/BOI & HUF may or may not earn profit/loss as a result of the operations. In case the AOP / BOI & HUF 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 & HUF

AOP/BOI

Association is Persons (AOP) means a group of people who comes together to achieve a common objective of entity to be registered with the same mindsets. Anybody who can be members of the AOP either can be a natural person (Individual) or artificial (Artificial Persons-e.g. company, LLP, etc.)

Body of Individuals (BOI) means any class of Individuals (Human Beings) who come together to achieve a common purpose/objective.

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

 

HUF

HUF means Hindu Undivided Family. This is being created for the purpose of tax saving of the family member by pooling assets into HUF. HUF is taxed separately from its members. A Hindu family can also form a HUF through its members. Same like Buddhists, Jains, and Sikhs can also form a HUF through its member. HUF has its own PAN has a different identity from individuals and files tax returns independent of its members.

 

Benefit BOI/AOP & HUF

Where member’s income exceeds the 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 a 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.

HUF

  • It is formed only the tax saving of family members. (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.

 

The disadvantage of AOP/BOI & HUF

As a taxable entity, a lot of challenges are faced by an AOP that consequence from non-availability of any entity-level tax benefits, disallowance of member’s salary, bonus, commission, interest, etc. and also there is non -availability of depreciation on assets owned and contributed by members as an expense while computing taxable income. AOP is a separate entity that is and is required to obtain its own PAN, maintenance of its books of accounts, and needs to consider the compliances at an entity level like payment of advance tax, TDS, & filingITR.

Further, the losses & unabsorbed depreciation incurred by AOP are not available for carrying forward in the hands of its members/ contributors in a condition on the dissolution of AOP.

if a member has other taxable income and may end up making a loss in their AOP, such member not able to set off their share of loss incurred in the AOP with other taxable income.

The Disadvantages of HUF

All Members has an equal right

Partition

Joint family system losing relevance

HUF continues to be file ITR till partition.

 

Legal Requirements.

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

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

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

Basic

INR 3,999/-

One Time Fee Per Entity

  • AOP/BOI & HUF Registration
  • PAN
  • TAN
  • Bank A/c.

Service Provide Within 7 Days

Fee exclusive of each registration.

Standard

INR 11,999/-

One Time Fee

  • AOP/BOI & HUF Registration
  • PAN
  • TAN
  • Trade Mark Registration
  • Logo Design
  • Opening Bank A/c.

Service Provide Within 15 Days

Premium

INR 11,999/-

Yearly Fee

    • Yearly Income Tax Compliances HUF, AOP, BOI.
    • TDS Compliances
    • Income Tax Return
    • Balance sheet, I&E, R&P, P&L.

    Services Provided Before the Due Date

    * Price mention of each registration.

Frequently Asked Questions

AOP/BOIC means a group of person comes together to achieve a common objective with same purpose.

No, there are no mandatory provisions to the registration of AOP/BOI, you apply on pan-based AOP/BOI deed.

AOP and BOI treated as separate legal entities for the purpose of assessment in income tax.

Where the total income of the member of BOI/ AOP is more than the maximum exemption Limit, members with the highest income would be charged at a maximum marginal rate of 30 percent.

Members of AOP and BOI can be natural people or artificial people.

Banks are not allowed to open an account in the name of unregistered AOP/BOI.

No, if an entity is unregistered then they cannot file a suit against anyone.