Person

Under Section 2(31) of the Income Tax Act, 1961, the term “person” is defined broadly to include seven categories, encompassing individuals, entities, and legal arrangements capable of being taxed.

Categories Included

Individual – A natural person.

Hindu Undivided Family (HUF) – A family unit recognized as a separate taxable entity.

Company – Both domestic and foreign companies.

Firm – Partnership firms registered or unregistered.

Association of Persons (AOP) – A group of individuals or entities coming together for a common purpose.

Body of Individuals (BOI) – Similar to AOP but typically not formed by agreement.

Local Authority or Trust – Governmental bodies or charitable trusts recognized under the law.

Significance Ensures that all possible entities that can earn income are covered under the tax framework. Determines tax liabilities and compliance obligations for each category. Provides legal clarity for assessment, collection, and enforcement of taxes.

Example:

Individual: Salaried employee

HUF: Family owning ancestral property generating rental income

Company: Private limited company earning profits

Trust: Charitable trust receiving donations