Special Entities

Association of Persons (AOP)

An Association of Persons (AOP) is an entity formed by two or more persons for a common purpose with an objective of producing income or profits.

An AOP or a body of individuals (BOI), whether incorporated or not, is treated as a ‘person’ under section 2(31) of the Income-tax Act, 1961, and is assessed as a separate entity for income tax purposes.

Advantages:

• Flexible structure for joint ventures
• Pooling of resources and skills
• Separate legal identity for tax assessment

Risks of Not Registering:

• Unlimited liability for members
• Disputes over profit sharing
• Lack of legal protection for assets