Definition of Person in Income tax Act 1961

In the Income Tax Act of 1961, the term “person” is defined in Section 2(31) as follows:

“Person” includes –

(i) an individual, (ii) a Hindu Undivided Family (HUF), (iii) a company, (iv) a firm, (v) an association of persons (AOP) or a body of individuals (BOI), (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses.

This definition is quite broad and covers a wide range of entities that may be subject to income tax in India. Here are some examples of how this definition may be applied in the latest context:

• An individual: This is a natural person, such as an employee, a self-employed professional, or a retired person. They are taxed on their income from various sources, such as salary, business, capital gains, or interest.
• A Hindu Undivided Family (HUF): This is a family unit that consists of several members who are all lineal descendants of a common ancestor. An HUF is taxed separately from its individual members, and is treated as a separate entity for tax purposes.
• A company: This is a legal entity that is registered under the Companies Act, 2013. A company is taxed on its profits and gains, and may also be subject to other taxes, such as dividend distribution tax or minimum alternate tax.
• A firm: This is a partnership firm or a limited liability partnership (LLP). A firm is taxed on its profits and gains, which are divided among its partners or members, and is treated as a separate entity for tax purposes.
• An association of persons (AOP) or a body of individuals (BOI): These are groups of individuals who come together for a common purpose, such as a club, a society, or a trust. AOPs and BOIs are taxed separately from their individual members, and are treated as separate entities for tax purposes.
• A local authority: This includes any municipal corporation, municipality, or panchayat, that is established by law and performs certain functions for the benefit of the local community. A local authority is taxed on its income from various sources, such as property tax or user charges.
• Every artificial juridical person: This includes entities that are not covered by any of the preceding sub-clauses, such as a co-operative society, a university, or a religious institution. These entities are treated as separate entities for tax purposes and are taxed on their income from various sources.