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1. Income received from different institutions [ Assessments of 'INDIVIDUAL']

1.       As a member of Hindu Undivided Family.

Any sum received by an individual as a member of H.U.F. out of family income is not to be included in his total income, because the share of income received from the H.U.F. is exempted in the hands of such individual, the family may or may not have paid tax on that income [Section 10 (2)1.


If the member earns his own income, besides being the member of H.U.F. he will pay tax on his own earned income.


But u/s 64 (2) where an individual converts his individual property into the common pool of H.U.F. of which he is a member, income from such property shall be included in his individual income.

2.       Income received as share from AOP.

The share from AOP is treated in following manner:


1.         Compute total income of AOP.


2.         For computing tax on total income rates to be applied are to he determined in following manner


A.        For determining rates of tax, the individual income of each member or partner is to be taken into account as under :


(i)         If individual income of all partners/members does not exceed Rs. 2,00,000 (for a female Rs. 2,50,000 and for a senior citizen Rs. 5,00,000) each, the AOP shall pay tax at the rates applicable to an individual.


(ii)       Share from such AOP is fully added in the individual income of each partner and is fully taxable again as partner’s individual income.


(iii)      Out of the tax a rebate of tax on share from AOP is allowed at average rate. Average rate is = Total Tax/Total Income x 100.


(iv)      No rebate of tax if total income of such AOP does not exceed                Rs. 2,00,000.


B.        If Total income of any one or more partners/members of AOP exceeds Rs. 2.00,000, the AOP shall pay tax at MMR i.e. 30% on whole of its total income.


Share from such AOP shall be fully exempted while calculating individual income of partners. Partners are not allowed any rebate u/s 86. This has been explained in detail in. part Ill of this book under the chapter ‘Computation of Tax’.

3.       As a partner of firm assessed as firm assessed u/s 184.

The share received by an individual from a firm shall not he included in his total income irrespective of the fact, whether the firm has paid the tax or not. Any salary or other remuneration and interest on capital is taxable under the head Profits and Gains to the extent above remuneration and interest are allowed as deduction to the firm.

4.       Share of income from firm assessed u/s 185.

Share of income received by a partner from a firm which has been assessed to tax u/s 185 as it has not submitted a copy of its instrument of partnership is fully exempted u/s lO(2A). The following sums received by partner from such firm shall also he exempted in the hands of the partner


(a) Any remuneration, bonus, fees, commission etc.


(b)       Interest on loan/capital from such firm.


Note. The above exemptions are applicable because firm covered u/s 185 is not allowed to charge these items as expense.

5.       As a shareholder of a company.

The gross amount of dividend received by an individual is to he included in his total income. The gross amount means, the net dividend received plus tax deducted at source. The shareholder is liable to pay tax on whole of his income from dividend i.e., the gross amount of dividend declared by the company. The assessee shall get credit of the tax deducted at source out of his final tax liability. The individual shall be entitled to the deduction as provided by the different sections of Income-tax Act.


With effect from assessment year 1998-99 dividend received from or declared or distributed by an Indian company on or after 1-6-97 shall he fully exempted and shall not form part of total income.


Note. Dividend from foreign company is fully taxable as income from other sources.


More Topics..on Assessment @ Individual
Income received from different institutions : Assessments of 'Individual'
Incomes Of Other Persons To Be Included In Total Income Of An Individual : Assessments of 'Individual'
Computation Of Tax Liability : Assessments of 'Individual'
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