Section 67A Income Tax Act 1961: Computation of AOP or BOI Member's Share
Updated: 28 September 2026
Section 67A of the Income-tax Act, 1961 prescribed the method for computing a member's share in the income or loss of an association of persons (AOP) or a body of individuals (BOI) where the members' shares are determinate and known. The provision ensured that payments such as interest, salary, bonus, commission or remuneration to members were properly taken into account when the balance income or loss of the AOP or BOI was apportioned among its members.
What Section 67A Covered
The provision applied to an assessee who was a member of an AOP or BOI in which the shares of the members were determinate and known. For this purpose, the provision excluded a company, a co-operative society, and a society registered under the Societies Registration Act, 1860 or a corresponding law in force in any part of India.
How a Member's Share Was Computed Under Section 67A
- Deduct member payments: interest, salary, bonus, commission or remuneration, by whatever name called, paid to any member for the previous year was deducted from the total income of the AOP or BOI.
- Apportion the balance: the resulting balance was divided among the members in the proportions in which they were entitled to share in the income of the AOP or BOI.
- If the apportioned amount was a profit: the relevant interest, salary, bonus, commission or remuneration paid to that member was added to the apportioned amount.
- If the apportioned amount was a loss: the relevant payment to that member was adjusted against the apportioned loss.
Apportionment Under Different Heads of Income
Under Section 67A(2), the member's share in the income or loss of the AOP or BOI was apportioned under the various heads of income in the same manner in which the AOP or BOI income or loss had been determined under those heads. This preserved the character of the underlying income or loss for assessment purposes.
Interest on Capital Borrowed by a Member
Section 67A(3) allowed interest paid by a member on capital borrowed for investment in the AOP or BOI to be deducted when computing the member's share chargeable under the head "Profits and gains of business or profession" in respect of that share.
Meaning of "Paid" Under Section 67A
The Explanation to Section 67A adopted the meaning of "paid" from Section 43(2) of the Income-tax Act, 1961. In substance, the expression covered an amount actually paid or incurred according to the method of accounting on the basis of which profits or gains were computed under the head "Profits and gains of business or profession".
Current Provision: Section 309 of the Income-tax Act, 2025
From 1 April 2026, Section 309 of the Income-tax Act, 2025 carries forward the subject of computing a member's share in the income of an AOP or BOI. It places the AOP or BOI exclusion rule and the computation mechanism in the same section, uses the expression "tax year", and states the meaning of "paid" within Section 309 itself.
The basic computation remains familiar: specified payments to members are removed before apportionment, the balance is apportioned according to the members' known shares, and the relevant member payment is then added to an apportioned profit or adjusted against an apportioned loss.
Section 67A of the Income-tax Act, 1961 - Statutory Text
67A(1). In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known, other than the entities excluded by the section, the member's share, whether profit or loss, is computed by first deducting specified member payments from the total income of the association or body and apportioning the balance among members according to their shares.
Clause (a): interest, salary, bonus, commission or remuneration, by whatever name called, paid to any member for the previous year is deducted from the total income of the association or body and the balance is apportioned among the members in their income-sharing proportions.
Clause (b): where the amount apportioned to a member is a profit, the specified payment made to that member is added to the apportioned amount, and the result is treated as the member's share.
Clause (c): where the amount apportioned to a member is a loss, the specified payment made to that member is adjusted against the apportioned amount, and the result is treated as the member's share.
67A(2). The computed share is apportioned under the various heads of income in the same manner in which the income or loss of the association or body has been determined under each head.
67A(3). Interest paid by a member on capital borrowed for investment in the association or body is deductible in computing the member's share chargeable under the head "Profits and gains of business or profession" in respect of that share.
Explanation: "paid" has the meaning assigned to it in Section 43(2) of the Income-tax Act, 1961.
Practical Points
- Confirm first whether the members' shares are determinate and known.
- Identify all interest, salary, bonus, commission and remuneration paid to members before apportioning the balance.
- Preserve the head-wise character of the AOP or BOI income or loss when allocating the member's share.
- Where a member borrowed capital for investment in the AOP or BOI, examine the specific interest deduction permitted by the applicable provision.
- For tax years beginning under the Income-tax Act, 2025, refer to Section 309 and the related provisions of the 2025 Act.
Official References
For the authoritative statutory material and transition resources, see the Income Tax Department page for Section 67A of the Income-tax Act, 1961 and the Income Tax Department portal for the Income-tax Act, 2025 and transition utilities.