As per Indian Income Tax laws in India, income tax is payable by any 'person', who is eligible for tax. The term 'person' is not restricted to only a single person, but includes many other types of taxpayers. Let's look at them in detail.
Individuals: Individuals refer to single human beings, who need to pay taxes on their income from various sources such as salaries, interest, property rent, and professional fees. Depending on income, there are different tax slabs for individuals, which results in different tax liabilities.
Hindu Undivided Family (HUF): While not defined in tax laws, HUF is a term defined under the Hindu personal law. HUF refers to a family including all persons who are descending from common ancestors, wives of such people, and any daughters who are not married. An HUF is considered as one entity or person, and the income of the HUF is charged as per individual tax rates.
Company: For tax purposes, a company is a separate legal entity, which is distinct from its shareholders. Companies can either be Indian or foreign. Taxes of incomes of companies are calculated at flat tax rates, which are different from individual tax rates.
Firms: Firms refer to a partnership between two or more individuals, who have agreed to share profits of the activity of the firm. A firm is liable to pay tax at a flat tax rate on its income. You should note that a firm and its partners are separate entities for tax purposes.
LLP: Limited Liability Partnership is similar to a partnership firm. The key difference between the two is that in a partnership firm, all the partners are equally liable for any legal claims against the company or any of the other partners. Under an LLP, the partner's liability is restricted only to their contribution in the LLP. For tax purposes, there's no difference between a partnership and an LLP, and both have to pay tax at a flat rate, irrespective of their income.
Association of Persons (AOPs): Association of Persons refers to two or more persons who come together for an income-producing activity. In an AOP, the 'person' can even be a company, and not necessarily an individual. Unlike a partnership firm, AOPs can operate even without a formal written contract. So if two people come together for business without creating a partnership firm, their firm will be called as Association of Persons. An AOP is a separate legal entity with a different tax rate.
Body of Individuals (BOI): Body of Individuals is somewhat similar to an AOP. However, unlike an AOP, which can also include companies or partnership firms, BOI can only have individuals as 'persons.' Also, a BOI does not have a separate tax rate. Instead, the individuals, who are a part of the BOI, pay tax on their income from BOI at their individual rates.
Co-operative societies: Co-operative societies refer to a group of people who come together for meeting different financial objectives. Some examples of co-operative societies are housing co-operative societies and consumer co-operative societies. From a definition point of view, a co-operative society is similar to AOPs. However, co-operative societies and AOPs have different tax rates. Also, co-operative societies have many tax concessions when compared to AOPs.
In India, tax liability varies as per the type of the taxpayer. Use our tax calculator to calculate your tax payable based on your taxpayer type.