Two or more people join together to make an investment in a product of a company. The taxable returns are paid to one of them (and distributed thereon). The company accounts its payment under the PAN of the payee (and not all the investors). Each of investors are taxable under different slabs. Now what is the right way to compute the tax and who should make the payment to the Income Tax department? Thanks.
The tax should be collectively taxed in the hands of such group of people which will fall under Association of Persons (AOP) / Body of Individuals (BOI).
Such AOP or BOI should keep accounts separately and income tax slabs should also be calculated overall. The distribution of profits should be done after calculating and payment of tax.
Any share received by the members from such AOP or BOI would be exempt in most of the cases (depending upon each case)
It is immaterial as to in whose name is the payment received by you or under whose PAN, the group accounts the receipts.
O P Bagla & Co LLP
New Delhi
CA Inter
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