Section 310 of the Income-tax Act, 2025 — Share of a Member of an AOP/BOI in Its Income (Successor to Section 86 of the 1961 Act)

In plain language

Scope note — what Section 310 actually deals with

The working title flagged this section as "charge of tax on AOP/BOI (verify actual scope)". On verification against the bare text of the Income-tax Act, 2025, Section 310 does NOT levy tax on an AOP/BOI, and it has nothing to do with trusts or charitable institutions. Section 310 governs how a member's share in the income of an Association of Persons (AOP) or a Body of Individuals (BOI) is treated in the member's own hands. It is the direct successor to Section 86 of the Income-tax Act, 1961. (Charitable trusts are dealt with separately, in Part B of Chapter XVII — Sections 332 to 355. The charge and computation of an AOP/BOI's own income sit in the assessment provisions read with Section 309.)

What Section 310 means in plain language

An AOP or BOI is a group of persons who come together to earn income jointly — for example, a joint-venture syndicate, a co-owned business, or a group running a project together. The AOP/BOI is a separate "person" and is assessed to tax on its own total income. Each member also has a share in that income. Without a special rule, the same income could be taxed twice — once in the AOP's hands and again in the member's hands. Section 310 is the anti-double-taxation valve. It decides, depending on how the AOP/BOI itself was taxed, whether the member should (a) get full exclusion, (b) include the share but effectively pay no extra tax, or (c) include and pay tax on the share.

Who it applies to

• Any member of an AOP or BOI — individual, HUF, firm, company or another AOP.
• The member's share is computed under Section 309 (the 2025 successor to Section 67A of the 1961 Act), which allocates the AOP's income among members after adjusting interest, salary, bonus or remuneration paid to members.
• It applies only where the member's shares are determinate/known. Where shares are unknown or indeterminate, Section 311 (successor to Section 167B) governs, and the AOP is generally taxed at the maximum marginal rate.

The three treatment situations — the heart of the section

• Situation A — AOP/BOI taxed at the maximum marginal rate (MMR) or higher: the member's share is completely excluded from the member's total income. No tax, and it does not even enter the return's taxable figure.
• Situation B — AOP/BOI taxed at normal (slab) rates and tax IS chargeable on it: the member's share is included in total income for rate-determination purposes, but the member gets relief so that no further tax is charged on that share. Mechanically this works like Section 110 of the 1961 Act (rebate at the average rate) — the share pushes up the slab but does not itself get taxed again.
• Situation C — no income-tax is chargeable on the AOP/BOI at all (for instance the AOP's total income is below the taxable threshold): the member's share is fully chargeable to tax as part of the member's own total income. This stops the income from escaping tax entirely.

Key conditions and limits

• There is no rupee threshold or cap in Section 310 itself — the outcome turns purely on how the AOP/BOI was assessed.
• The "share" is net of member-level adjustments already made at the AOP level (interest/salary to members added back under the equivalent of Section 40(ba)).
• Even where the share is excluded/relieved, it may still affect the rate of tax on the member's other income (in Situation B), so it must be disclosed in the return.
• A company member is equally entitled to the benefit — the section draws no distinction based on the member's status.

How it interacts with related sections

• Section 309 — computes the member's share; Section 310 cannot operate without it.
• Section 311 — takes over when member shares are indeterminate/unknown, triggering MMR at the AOP level.
• Charging and slab provisions — determine whether the AOP paid tax at MMR, at slab rates, or nil, which is the switch that decides A, B or C above.

Practical implications for taxpayers

If you are a member of an AOP/BOI, before filing your return you must find out how the AOP was taxed. If it paid at MMR, leave your share out entirely (Situation A). If it paid at ordinary rates, show the share but claim relief so it is not taxed twice (Situation B). If the AOP paid nothing, your share is fully taxable in your hands (Situation C). Keeping the AOP's computation and its tax assessment on record is essential, because the treatment in your return depends entirely on the AOP's position. The rule prevents both double taxation and complete escapement of income.