Person means under Income Tax / Person [sec. 2(31)] /Direct Tax

PERSON [SEC. 2(31)]

The term person includes the following:

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), whether incorporated or not;

vi) a Local authority; &

vii) every artificial juridical person not falling within any of the preceding categories.

Notes:

1. On the basis of a well settled principle that “the Crown cannot be charged to tax”, it can be said that unless 

otherwise specifically mentioned the Union Government cannot be taxed in India. 

2. An association of persons or a body of individuals or a local authority or an artificial juridical person shall be 

deemed to be a person, whether or not such person or body or authority or juridical person was formed or 

established or incorporated with the object of deriving income, profits or gains.

3. A firm includes limited liability partnership.

Individual

The word ‘individual’ means a natural person, i.e. human being. “Individual” includes a minor or a person of 

unsound mind. However, Deities are assessable as juridical person. 

Trustee of a discretionary trust shall be assessed as an individual 

Hindu Undivided Family (HUF)

A Hindu Undivided Family (on which Hindu law applies) consists of all persons lineally descended from a common 

ancestor & includes their wives & unmarried daughters. 

Taxpoint: 

🔸Only those undivided families are covered here, to which Hindu law applies. It also includes Jain and Sikh 

families.

🔸Once a family is assessed as Hindu undivided family, it will continue to be assessed as such till its partition. 

Company [Sec. 2(17)] 

Company means:

a. any Indian company; or

b. any body corporate, incorporated under the laws of a foreign country; or

c. any institution, association or body which is or was assessable or was assessed as a company for any 

assessment year on or before April 1, 1970; or

d. any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is 

declared by general or special order of the Central Board of Direct Taxes to be a company.

Indian Company [Sec. 2(26)] 

An Indian company means a company formed & registered under the Companies Act, 1956 & includes

a. a company formed and registered under any law relating to companies formerly in force in any part of India 

other than the state of Jammu & Kashmir and the Union territories specified in (c) infra;

b. a company formed and registered under any law for the time being in force in the State of Jammu & 

Kashmir;

c. a company formed and registered under any law for the time being in force in the Union territories of Dadar 

& Nagar Haveli, Goa, Daman & Diu and Pondicherry;

d. a corporation established by or under a Central, State or Provincial Act;

e. any institution, association or body which is declared by the Central Board of Direct Taxes (CBDT) to be a 

company u/s 2(17).

In the aforesaid cases, a company, corporation, institution, association or body will be treated as an Indian 

company only if its registered office or principal office, as the case may be, is in India.

Domestic Company [Sec. 2(22A)] 

Domestic company means: 

i) an Indian company; or 

ii) any other company, which in respect of its income liable to tax under the Act, has made prescribed 

arrangements for the declaration and payment of dividends (including dividend on preference share), 

payable out of such income, within India.

Foreign Company [Sec. 2(23A)]

Foreign company means a company which is not a domestic company.

Company in which public are substantially interested [Sec. 2(18)]

Following companies are said to be a company in which public are substantially interested:

1. Government Company;

2. A company u/s 8 of the Companies Act, 2013;

3. Mutual benefit finance company;

4. Listed company;

5. Company in which shares are held by co-operative societies;

6. Company which is prescribed by CBDT

Firm

As per sec. 4 of Indian Partnership Act, 1932, partnership means “relationship between persons who have agreed 

to share profits of the business carried on by all or any one of them acting for all”. 

Persons, who enter into such business, are individually known as partners and such business is known as a Firm. A 

firm is, though not having a separate legal entity, but has separate entity in the eyes of Income-tax Act

Taxpoint: 

🔸A partnership firm is a separate taxable entity apart from its partners.

🔸In Income tax, a Limited liability partnership shall be treated at par with firm.

Association of Persons (AOP) or Body of Individuals (BOI)

An AOP means a group of persons (whether individuals, HUF, companies, firms, etc.) who join together for common 

purpose(s). Every combination of person cannot be termed as AOP. It is only when they associate themselves in an 

income-producing activity then they become AOP. Whereas, BOI means a group of individuals (individual only) 

who join together for common purpose(s) whether or not to earn income. 

Co-heirs, co-donees, etc joining together for a common purpose or action would be chargeable as an AOP or 

BOI. In case of income of AOP, the AOP alone shall be taxed and the members of the AOP cannot be taxed 

individually in respect of the income of the AOP 

Difference between AOP and BOI 

🔸In case of BOI, only individuals can be the members, whereas in case of AOP, any person can be its member 

i.e. entities like Company, Firm etc. can be the member of AOP but not of BOI.

🔸In case of an AOP, members voluntarily get together with a common will for a common intention or purpose, 

whereas in case of BOI, such common will may or may not be present. 

Local Authority

As per Sec. 3(31) of the General Clause Act, a local authority means a municipal committee, district board, body 

of Port Commissioners, Panchayat, Cantonment Board, or other authorities legally entitled to or entrusted by the 

Government with the control and management of a municipal or local fund. 

Artificial Juridical Person

Artificial juridical person are entities -

• which are not natural person; 

• has separate entity in the eyes of law; 

• may not be directly sued in a court of law but they can be sued through person(s) managing them 

E.g: Deities, Idols, University, Bar Council, etc.

Note: Under the Income-tax Act, such person has been provided exemption from payment of tax under separate 

provisions of the Act, if certain conditions mentioned therein are satisfied.

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