What is the Full form of AOP in Income Tax?
The AOP Full Form in Income Tax is Association of Persons. An Association of Persons is a collection of individuals or entities coming together as a group with a common purpose but does not form a separate legal entity such as a company or a partnership firm.
Income tax treatment of AOPs
AOPs are treated as a separate taxable unit and are liable to pay tax on its net income. Net income can be calculated in a similar way as that of businesses. Gross income minus all the permissible costs would give the net income of the AOP.
Registration of AOPs
There is no requirement for an AOP to be registered under the Companies Act. However, a few forms of AOPs like co-operative societies to which certain laws govern the forming of such AOPs would require a compulsory registration. An AOP is liable to pay tax according to the rate of tax applicable to the types of income earned by it. Income tax rates for AOPs can differ from the rates applicable to individuals.
Tax Deduction at Source:
AOPs may be liable to deduct tax at source on certain payments they make on behalf of the recipients, such as interest, rent, or professional fees. The TDS so deducted must be deposited with the government within the stipulated time frame.