Difference Between AOP & BOI - Taxation

Association of Persons (AOP) means a group of persons who come together for achieving a common objective and have the same mindsets. Members of the AOP can be natural or artificial persons.

Body of Individuals (BOI) means a group of individuals (natural persons) who join together for earning income.

Association of Persons

The Indian Income Tax Act, 1961, defines AOP (Association of Persons) as an integration of persons for a mutual benefit or a common purpose. They may be individual or artificial persons such as LLP or a company. For example, two companies may join together and form an AOP for the achievement of a common objective.

Body of Individuals

BOI (Body of individuals) is similar to an AOP and is also an accumulation of individuals who have come together with an objective of earning some income. For example, two individuals may get together and do something together for earing some income.

Differences Between AOP and BOI

An Association of Persons (AOP) and a Body of Individuals (BOI) convey two different arrangements of people. The fact that both of these expressions at times are used interchangeably doesn’t justify the restrictive interpretation. We need to stop interchanging the usage of these words as they represent two different compositions.

There are certain differences between an Association of Persons and Body of Individuals. A person in AOP could be a company or an individual person. The term person could include any association, body of individuals or company, irrespective of whether it is incorporated or not.

However, in a BOI, only individuals can join with the intention of earning some income. Hence we can say, BOI only comprises of individuals, whereas an AOP could include legal entities.

In a nutshell, it could be said that an AOP (association of persons) has a legal meaning and it represents a unit having duties and rights. For instance, if a group of people are travelling in a train, or waiting for a bus at the bus stop, they might be a group of people or in the literal sense a “body of individuals”. However, they’re not an AOP (association of persons) in a legal sense.

Moreover, an AOP implies a combination of persons which doesn’t mean that any combination or group of persons is an AOP. It’s only when these individuals associate themselves with any income-producing activity they can be called an AOP.

Taxation of AOP and BOI

The individual share of members in case of BOI or AOP could be either unknown/intermediate or known/determinate. In these cases, the tax payable by the AOP/BOI will be calculated as under. When: