Special provisions relating to certain personsCentral
Section 307 of Income Tax Act 2025
- (1)The income or any part thereof, in respect of the person mentioned in sections 303(1)(c) and (d) shall be chargeable to tax at the maximum marginal rate, if—
- (a)such income or such part thereof is not specifically receivable on behalf or for the benefit of any one person; or
- (b)the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown.
- (2)The income or any part thereof as referred to in sub-section (1), shall be chargeable to tax at the rate applicable to an association of persons as if it were its total income, if,—
- (a)none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in case of an association of persons, or is a beneficiary under any other trust; or
- (b)such income or part of such income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or
- (c)such income or part of such income is receivable under a trust created before the 1st March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide—
- (i)exclusively for the benefit of the relatives of the settlor; or
- (ii)exclusively for the benefit of the members of such family, where the settlor is a Hindu undivided family,
in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance; or
- (d)such income is receivable by the trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession.
- (3)Subject to the provisions of sub-section (4), where the income in respect of the person mentioned in section 303(1)(d) consists of, or includes, profits and gains of business, tax shall be charged at the maximum marginal rate on such income or part thereof.
- (4)Where the profits and gains referred to in sub-section (3) are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him, income or part thereof shall be chargeable to tax at the rate applicable to an association of persons.
- (5)For the purposes of this section,—
- (a)such income or any part thereof shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the tax year is expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and is identifiable as such on the date of such order, instrument or deed;
- (b)the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is received shall be deemed to be indeterminate or unknown unless the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable, are expressly stated in the order of the court or the instrument of trust or wakf deed and are ascertainable as such on the date of such order, instrument or deed.
Summary
- This provision applies to court-appointed officers, including the Court of Wards, Administrator-General, Official Trustee, receivers, or managers managing property on behalf of others.
- It also applies to trustees of a trust that has been declared by a written, duly executed legal instrument.
- The income or any part of the income managed by these representatives is taxed at the maximum marginal rate under specified circumstances.
- It specifically cross-references sections 303(1)(c) and (d).
Practical examples
1A written trust is set up on July 10, 2026, with Mohan acting as the trustee. The trust document does not specify what share of the income each of the three children will get. The tax officer charges Mohan tax at the maximum marginal rate on the trust's income of 150,000 rupees under Section 307.
2A court appoints Anita as a receiver on October 12, 2026, to manage property for several disputing family members. Because the exact individual shares of the family members are undecided, the court-managed income is taxed at the maximum marginal rate.
FAQ
1. Who are the representative assessees referred to in Section 307 through sections 303(1)(c) and (d)?
They refer to court-appointed officers (like the Court of Wards, Administrator-General, Official Trustee, receivers, or managers) and trustees of a trust declared by a written instrument.
2. What is the specific tax rate applied under Section 307?
Income or any part thereof in respect of the specified representatives is chargeable to tax at the maximum marginal rate.
3. Which section defines the representative assessees mentioned in Section 307?
Section 303, specifically sub-sections (1)(c) and (1)(d), defines them.
Test yourself
Q1.Under Section 307(1), at what rate is the income of the specified representative assessees charged to tax?
Q2.Section 307(1) applies to persons mentioned in which sub-sections of Section 303?
Q3.Which of the following is included in section 303(1)(c) as a person managed under court order?