Section 324 of the Income-tax Act, 2025

Section 324 — Charge of tax in case of a firm. Successor to s.167A of the 1961 Act.

Where this section sits

Section 324 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.

← Section 323 · Section 325 →

What this section does

The section is the charging provision for a firm. In the case of a firm which is assessable as a firm, tax is charged on its total income at the rate specified in any Central Act for the relevant tax year. It fixes the person charged — the firm itself — and the measure — its total income — and leaves the rate to be supplied by the Central Act for the year.

Why it is there

A firm needs a charge of its own, distinct from the charge on its partners, and it needs one that does not have to be re-enacted whenever rates change. The section supplies the charge and the measure, and points to the annual Central Act for the number.

Who it applies to

A firm which is assessable as a firm
The Assessing Officer charging tax on the firm's total income

The figures, and what each one turns on

Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.

What	Figure	The condition on it	Where
Rate of tax on a firm's total income	Not stated in this section — the rate specified in any Central Act for the relevant tax year	Applies where the firm is assessable as a firm	Section 324

What this means in practice

Two things are settled here and one is not. It is settled that the taxable person is the firm, on its own total income, and that this applies only where the firm is assessable as a firm — an entity that fails that description is not charged by this section. What is not settled is the rate: the section names none, and quoting a percentage from it is quoting something that is not there. The rate for a tax year comes from the Central Act for that year.

An example

Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.

A firm assessable as a firm computes a total income of 40 lakh rupees for a tax year. Section 324 charges the tax on the firm itself on that 40 lakh; the percentage applied is whatever the Central Act for that tax year specifies, and no figure can be taken from this section.

Where you meet this section

On the firm's own return and in the demand raised on the firm under section 289 after its assessment. A partner does not meet this section directly — it charges the firm, not the partners.

The words themselves

In the case of a firm which is assessable as a firm, tax shall be charged on its total income at the rate as specified in any Central Act for relevant tax year.

Section 324, Income-tax Act, 2025.

What people get wrong

Looking for the rate in this section. It specifies none; the rate is what the Central Act for the relevant tax year specifies.
Reading the charge as falling on the partners. The tax is charged on the firm, on its total income.
Applying the section to a firm that is not assessable as a firm. The words "which is assessable as a firm" are a condition, not a description.

What this replaced

The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.

167A - Charge of tax in the case of a firm

See the full 1961 to 2025 concordance.

Circulars of the Board on this section

A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.

Circular No. 320 — Section 167A l Assessment Where Shares of Members Unknown 1982-01-11

See the circulars index.

Read with

Section 325
Section 326

What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.