Amended and updated notes on section 167B of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Charge of tax where shares of members in association of persons or body of individuals unknown, etc.
Chapter XV (Sections 159 to 180A) of the Income Tax Act 1961 deals with the provisions related to liability in special cases. Section 167B of IT Act 1961 provides for Charge of tax where shares of members in association of persons or body of individuals unknown, etc.
Recently, we have discussed in detail section 167A (Charge of tax in the case of a firm) of IT Act 1961. Today, we learn the provisions of section 167B of Income-tax Act 1961. The amended provision of section 167B is effective for financial year 2020-21 relevant to the assessment year 2021-22.
In this article, you will learn detail of the provisions of section 167B of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-167B: Charge of tax where shares of members in association of persons or body of individuals unknown
Section 167B(1) of Income Tax Act
Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India) 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 the association or body at the maximum marginal rate:
Provided that, 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 association or body at such higher rate.
Section 167B(2) of Income Tax Act
Where, in the case of an association of persons or body of individuals as aforesaid [not being a case falling under sub-section (1)],—
- (i) the total income of any member thereof for the previous year (excluding his share from such association or body) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax shall be charged on the total income of the association or body at the maximum marginal rate;
- (ii) any member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the association or body which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum marginal rate.
Explanation: 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.