Income Tax || How to change Tax Slab in AOP
What is the Tax Rate in AOP's
The tax slabs for an Association of Persons (AOP) or Body of Individuals (BOI) under Indian tax laws depend on the type of AOP/BOI and the nature of income. Here's a breakdown:
1. Normal AOP/BOI
- If the AOP/BOI is taxed at the rates applicable to an individual, the following tax slabs apply:
| Income Range (₹) | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
- Surcharge: If the total income exceeds ₹50 lakhs, a surcharge is levied:
- 10% of income tax if total income exceeds ₹50 lakhs but up to ₹1 crore.
- 15% of income tax if total income exceeds ₹1 crore.
- 25% of income tax if total income exceeds ₹2 crores but up to ₹5 crores.
- 37% of income tax if total income exceeds ₹5 crores.
- Health and Education Cess: 4% on income tax (plus surcharge, if applicable).
2. AOP/BOI where members have specific shares
If the members' shares are determinate (specified shares), the income of the AOP/BOI is taxed at the maximum marginal rate (MMR), which is 30%. This rate is applied if the AOP/BOI’s total income exceeds the basic exemption limit.
Surcharge: Same as mentioned above.
Health and Education Cess: 4% on income tax (plus surcharge, if applicable).
3. AOP/BOI where no member has income exceeding the basic exemption limit
- In this case, the AOP/BOI is taxed as if each member is an individual. This means the tax slabs applicable to individuals are applied to the AOP/BOI’s income.
4. AOP/BOI with Foreign Companies as Members
- If any member of the AOP/BOI is a foreign company, the AOP/BOI’s income will be taxed at 40% (plus applicable surcharge and cess).
Important Points:
- Losses: Losses of an AOP/BOI cannot be carried forward or set off against the income of its members.
- Alternate Minimum Tax (AMT): AOP/BOI is subject to AMT at 18.5% of adjusted total income, if applicable.
How to Change the Tax Rate in Software:
Condition 1: Normal Tax Rate Of AOP/BOI:
Step 1:
Go to Transaction >> List of Members/ Trustees:
Step 2:
When shares are determined, the following steps should be followed:
1. Do not Check mark on Share of person is Indeterminate.
2. Do not Check Mark on Income Exceeds Max Amt not Charges to Tax.
Condition 2: AOP/BOI where members have specific shares:
Step 1:
Go to Transaction >> List of Members/ Trustees.
Then, Follow the Condition 1 and Check Mark on "Income Exceeds Max Amt not Charges to Tax".
Condition 3: When shares are indeterminate:
Step 1:
Go to Transaction >> List of Members/ Trustees.
Then Follow the Condition 2 and Check Mark on Share of Person is Indeterminate:
Hope This Helps.
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