Section 304 Income Tax Act 2025: Who Is Liable to Pay Tax as a Representative Assessee?
Section 304 explains how income received or managed on another person's behalf is assessed and recovered from a representative assessee. It also deals with direct assessment of beneficiaries, partly taxable trust income and recovery against property under the representative's control.
What is a representative assessee under Section 304?
A representative assessee is a person treated by law as responsible for tax compliance in relation to specified income received or receivable for another person. Section 303 identifies categories such as agents of non-residents, guardians or managers receiving income for certain persons, court-appointed managers and trustees. Section 304 sets out the corresponding liability and powers of assessment and recovery.
Beneficiary or person represented: The person for whose benefit the income is received or to whom it belongs. Assessing Officer: The income-tax authority exercising the assessment powers applicable under the Act. Representative capacity: An assessment made against a person because that person acts for another, rather than because the relevant income is beneficially theirs.
Section 304 explained clause by clause
Section 304(1): Duties, assessment and recovery
A representative assessee has the same duties, responsibilities and liabilities in respect of the represented income as though that income accrued to or was received by the representative beneficially. Under clause (a), assessment may be made in the representative's own name, but is deemed to be made only in the representative capacity. Under clause (b), tax is levied and recovered in the same manner and to the same extent as it would be from the represented person, subject to the other provisions of Chapter XVII.
Section 304(2): No assessment under another provision in the same capacity
Where a person is assessable as a representative assessee for particular income under Chapter XVII, that person is not to be assessed in respect of that income under another provision of the Act. This concerns the assessment capacity for the income and should not be confused with a blanket exemption for the income itself.
Section 304(3): Direct assessment of the person represented
The Assessing Officer may assess the person for whose benefit the income is receivable directly, or recover the relevant tax from that person. Representative assessment does not eliminate the statutory power to proceed directly against the beneficiary or other person represented, as applicable.
Section 304(4): Where only part of trust income is taxable
If only part of a trust's income is chargeable under the Act, the beneficiary's corresponding share of chargeable income is apportioned according to the statutory formula below.
Section 304(5): Remedies against property
The Assessing Officer has the same remedies against property vested in, controlled by or managed by the representative assessee as against property of a person liable for tax. The rule applies whether the demand is raised against the representative assessee or directly against the beneficiary. Its application depends on the relevant property, demand and recovery provisions.
How is the taxable part of a trust beneficiary's income calculated?
A = chargeable part of the trust's income
B = whole income of the trust
C = income receivable by the beneficiary from the trust
The formula apportions the chargeable portion of the trust's income to the beneficiary in proportion to the beneficiary's share of the trust income. It does not, by itself, determine the final tax rate, exemptions or deductions.
Practical examples of Section 304
Example 1: Trustee assessed in representative capacity
A trustee receives taxable investment income for an identified beneficiary. If the trustee is a representative assessee under Section 303, assessment for that income may be made in the trustee's name under Section 304(1), expressly in the trustee's representative capacity. The applicable substantive rules governing the trust and beneficiary still matter.
Example 2: Part of a trust's income is chargeable
Assume the whole income of a trust is Rs. 10,00,000, of which Rs. 6,00,000 is chargeable. A beneficiary receives Rs. 2,00,000. The attributable chargeable part is (6,00,000 / 10,00,000) × 2,00,000 = Rs. 1,20,000. This is an illustration of apportionment, not a final tax computation.
Example 3: Direct recovery from beneficiary
If income is receivable for a beneficiary through a representative assessee, Section 304(3) preserves the Assessing Officer's ability to assess or recover tax directly from the beneficiary where legally appropriate.
How does Section 304 relate to other provisions?
- Section 302: Liability of a legal representative after a person's death; it expressly refers to certain provisions of Section 304.
- Section 303: Identifies who qualifies as a representative assessee.
- Section 305: Addresses a representative assessee's right to recover tax paid.
- Section 306: Addresses who may be regarded as an agent.
- Section 307: Special tax charge where beneficiaries' shares are unknown.
Frequently asked questions
Does a representative assessee pay tax on all personal income of the beneficiary?
No. Section 304 applies to the income in respect of which the person is a representative assessee. Other income and liabilities require separate consideration under the Act.
Can the Income Tax Department assess the beneficiary directly?
Yes. Section 304(3) expressly preserves direct assessment or recovery from the person for whose benefit the relevant income is receivable.
Is an assessment in a trustee's name always a personal assessment?
No. Section 304(1)(a) expressly deems an assessment for represented income to be made in the representative capacity only.
Does Section 304 apply to partly exempt trust income?
Section 304(4) sets out an apportionment method when only part of the trust's income is chargeable. The actual treatment depends on the provisions governing the trust and the income concerned.
Statutory text and official references
Updated: 11 November 2026. For professional reliance, verify the applicable statutory text, amendments, rules and judicial decisions. This article is general legal information.