Sections 309-311 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
An association of persons (AOP) or body of individuals (BOI) is taxed in its own hands, and its members are taxed on their shares. Sections 309 to 311 say how a member's share is worked out, when the member pays tax on it and when the share is left out, and what rate applies to the AOP or BOI when members' shares are unknown. This article reads them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Where members' shares are determinate and known, interest, salary, bonus, commission or remuneration paid to a member is deducted from the AOP's income, the balance is split in the sharing ratio, and the payment is added back to the receiving member's share. Whether a member pays tax on that share again depends on section 310. Where shares are indeterminate or unknown, section 311 charges the AOP at the maximum marginal rate, or a higher rate that applies to a member.
Section 309: how a member's share is computed
Sub-section (1): what an AOP or BOI means here
For section 309 and sections 310 and 311, an association of persons or body of individuals does not include a company, a co-operative society, or a society registered under the Societies Registration Act, 1860 (21 of 1860) or any corresponding law in force in any part of India. The Act refers to that Societies Registration Act, 1860; read that law for its meaning.
Sub-section (2): the computation
In computing the total income of a member of an AOP or BOI wherein the shares of members are determinate and known:
| Step | Rule |
|---|---|
| (a) | Any interest, salary, bonus, commission or remuneration, by whatever name called, paid to any member in respect of the tax year is deducted from the total income of the AOP or BOI; the balance is apportioned among the members in the proportions in which they are entitled to share in the income |
| (b) | The interest, salary, bonus, commission or remuneration in (a) is (i) added to the apportioned amount, if that amount is a profit; or (ii) adjusted against the apportioned amount, if it is a loss; and the resultant amount is treated as the share of the member in the income of the AOP or BOI |
Sub-sections (3) to (5)
- (3) The share so computed is apportioned under the various heads of income in the same manner in which the income or loss of the AOP or BOI has been determined under each head.
- (4) Any interest paid by a member on capital borrowed by him for investment in the AOP or BOI is deducted from his share in computing the share chargeable under the head "Profits and gains of business or profession".
- (5) "Paid" means actually paid or incurred according to the method of accounting on which profits or gains are computed under that head.
Section 310: share of a member in the income of the AOP or BOI
| Sub-section | Rule |
|---|---|
| (1) | Income-tax is not payable by a member in respect of his share in the AOP's or BOI's income, computed under section 309, except in a case referred to in sub-section (2) |
| (2) | Where no income-tax is chargeable on the total income of the AOP or BOI, the member's share computed under section 309 is chargeable to tax as part of his total income |
| (3) | Where no income-tax is payable by the member under sub-section (1): (a) if the AOP or BOI is chargeable on its total income at the maximum marginal rate or any higher rate under any provision of the Act, the share is not included in the member's total income; (b) in any other case, the share forms part of his total income |
Put simply, the AOP's own tax is the main charge. Where the AOP is taxed at the maximum marginal rate or higher, the member's share is left out of his total income. In other cases the share goes into his total income.
If you are a member of an AOP or BOI and are unsure whether your share goes into your return, our income tax return filing team can help you read these sub-sections against your facts.
Section 311: charge where shares are unknown
Sub-sections (1) and (2): shares indeterminate or unknown
Where the individual shares of members in the whole or any part of the income are indeterminate or unknown, tax is charged on the total income of the AOP or BOI at the maximum marginal rate, subject to sub-section (2). Where the total income of any member is chargeable at a rate higher than the maximum marginal rate, tax is charged on the total income of the AOP or BOI at that higher rate.
Sub-section (3): shares known, but a member has other income
Where the individual shares are determinate or known:
- (a) where the total income of any member for the tax year (excluding his share from the AOP or BOI) exceeds the maximum amount which is not chargeable to tax, tax is charged on the total income of the AOP or BOI at the maximum marginal rate;
- (b) where the total income of the AOP or BOI for the tax year is chargeable at a rate higher than the maximum marginal rate, (i) tax is charged on that portion of the total income which is relatable to the share of that member at such higher rate; and (ii) the balance of the total income is taxed at the maximum marginal rate.
Printing note: in clause (a) the copy consulted prints "which is not chargeable to, tax shall be charged", with a misplaced comma; it is read as "which is not chargeable to tax, tax shall be charged". Clause (b) is also printed without a verb after "for the tax year"; it is read as above.
Sub-section (4): when shares are deemed unknown
The individual shares of members in the whole or any part of the income are deemed indeterminate or unknown if they are indeterminate or unknown on the date of formation of the AOP or BOI or at any time thereafter.
For a related rule on trusts where beneficiaries' shares are unknown, see our article on sections 307 and 308. The Act does not print the maximum marginal rate in these sections; none is stated here.
A worked example
Names and amounts are assumed; rates are not printed in these sections, so the example shows the computation of shares and the rule that applies, not the tax.
Section 309. Lotus Traders, an association of persons, has two members, Nisha and Rohan, who share profits equally. The total income of the AOP is Rs. 10,00,000. The AOP pays Rohan a salary of Rs. 1,00,000 for the tax year, on an accrual basis as per its method of accounting (so "paid" within section 309(5)).
- Deduct the salary: Rs. 10,00,000 - Rs. 1,00,000 = Rs. 9,00,000.
- Apportion equally: Rs. 4,50,000 each.
- Add the salary to the member who received it, because the apportioned amount is a profit: Rohan's share = Rs. 4,50,000 + Rs. 1,00,000 = Rs. 5,50,000. Nisha's share = Rs. 4,50,000. The two shares add back to Rs. 10,00,000.
- If Rohan paid interest of Rs. 30,000 on money borrowed to invest in the AOP, that interest is deducted from his share under the head "Profits and gains of business or profession": Rs. 5,50,000 - Rs. 30,000 = Rs. 5,20,000 (section 309(4)).
Section 310. If Lotus Traders is chargeable on its total income at the maximum marginal rate, Nisha's and Rohan's shares are not included in their total incomes (sub-section (3)(a)). If it is chargeable at a rate lower than that, the shares form part of their total incomes (sub-section (3)(b)).
Section 311. If the members' shares were indeterminate or unknown, the AOP's total income of Rs. 10,00,000 would be taxed at the maximum marginal rate (or at a higher rate if a member's total income is taxed at a higher rate). If the shares are known and Rohan has other income exceeding the maximum amount not chargeable to tax, sub-section (3)(a) charges the AOP's total income at the maximum marginal rate.
Need help with an AOP or BOI?
Whether a member's share is taxed again, and at what rate the AOP itself is taxed, depends on the members' other income and on whether shares are fixed. Our team can help you structure a return for the AOP or BOI and its members. See our income tax return filing service.
Key takeaways
- Section 309 applies where shares are determinate and known; payments to members are deducted, the balance is apportioned, and the payments are added to the receiving member's share.
- Interest on capital borrowed by a member to invest in the AOP is deducted from his share under the head "Profits and gains of business or profession".
- Under section 310, a member generally is not taxed again on his share, but is taxed where the AOP has no tax chargeable, and the share is excluded or included depending on the AOP's rate.
- Under section 311, unknown or indeterminate shares lead to tax at the maximum marginal rate on the AOP's total income, or a higher rate where a member's income is taxed higher.
- Shares are treated as unknown if they were unknown at formation or at any time thereafter.
- Companies, co-operative societies and registered societies are not AOPs or BOIs for these sections.
Read next
- Sections 307 and 308: trusts with unknown beneficiaries and oral trusts
- Sections 324 to 326: charge of tax and assessment of firms
- Sections 303 to 306: representative assessees
- Chapter XVII: special provisions relating to certain persons
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.