Section 311 of Income Tax Act 2025 in hindi
Charge of tax where shares of members in association of persons or body of individuals unknown, etc
- (1)Where the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of such association or body at the maximum marginal rate, subject to the provision of sub-section (2).
- (2)In a case referred to in sub-section (1) where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum marginal rate, tax shall be charged on the total income of the such association or body at such higher rate.
- (3)Where the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body are determinate or known, and—
- (a)where the total income of any member of such association or body for the tax year (excluding his share from such association or body) exceeds the maximum amount which is not chargeable to, tax shall be charged on the total income of the association or body at the maximum marginal rate;
- (b)where the total income of such association or body for the tax year chargeable to tax at a rate which is higher than the maximum marginal rate,—
- (i)tax shall be charged on that portion of the total income of association or body which is relatable to the share of such member at such higher rate; and
- (ii)the balance of the total income of such association or body shall be taxed at the maximum marginal rate.
- (4)For the purposes of this section, the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body shall be deemed to be indeterminate or unknown if such shares (in relation to the whole or any part of such income) are indeterminate or unknown on the date of formation of such association or body or at any time thereafter.
Summary
- If a group of people form an association of persons or body of individuals and their individual shares in the income are not known or cannot be determined, the entire income of the group is taxed at the maximum marginal rate (the highest tax rate).
- If any member of this group has other income that is taxed at a rate higher than the maximum marginal rate, then the entire income of the group is taxed at that higher rate.
- If the individual shares of the members are known, but any member's other income (excluding their share from the group) is more than the maximum amount that is not taxed, then the entire income of the group is taxed at the maximum marginal rate.
- If the group's income is taxable at a rate higher than the maximum marginal rate because of a member's high tax bracket, then that member's share is taxed at the higher rate, and the remaining income is taxed at the maximum marginal rate.
- The shares of the members are treated as unknown or indeterminate if they are unknown or cannot be determined on the date of formation of the group or at any time after that.
Practical examples
FAQ
1. What happens if the individual shares of the members of an association of persons are unknown?
Tax will be charged on the total income of the association at the maximum marginal rate, unless the exception in sub-section (2) applies.
2. What tax rate applies if a member of an association with unknown shares has a tax rate higher than the maximum marginal rate?
Under sub-section (2), if any member's total income is taxable at a rate higher than the maximum marginal rate, then the entire total income of the association of persons or body of individuals will be charged at that higher rate.
3. How does the law determine if individual shares of members are indeterminate or unknown?
Under sub-section (4), the individual shares are deemed to be indeterminate or unknown if they are indeterminate or unknown on the date of formation of the association or body, or at any time after that date.
4. What happens if shares are known, but a member's personal income exceeds the limit that is not taxed?
Under sub-section (3)(a), if any member's total income for the tax year (not counting their share from the association) exceeds the maximum amount which is not chargeable to tax, then the total income of the association will be taxed at the maximum marginal rate.
5. How is the tax calculated if shares are known but a member's income is taxed at a rate higher than the maximum marginal rate?
Under sub-section (3)(b), the portion of the association's income that relates to that member's share is taxed at that higher rate, and the rest of the association's income is taxed at the maximum marginal rate.
Test yourself
1.Under sub-section (1), what is the default tax rate for an association of persons if the individual shares of its members are unknown?
2.According to sub-section (2), what tax rate applies to the total income of the association of persons if a member's total income is chargeable at a rate higher than the maximum marginal rate?
3.Under sub-section (3)(a), what condition triggers the taxation of the entire association's income at the maximum marginal rate even when individual shares of members are known?
4.If the individual shares are known and a member's income is subject to a rate higher than the maximum marginal rate, how is the remaining balance of the association's income taxed under sub-section (3)(b)?
5.At what point in time must individual shares be indeterminate or unknown for them to be deemed so under sub-section (4)?