Prohibited category of persons - Section 13(3) - Income Tax - Ready Reckoner - Income Tax

Prohibited category of persons - [ Section 13(3) ] Section13(3) gives the list of persons, use or application of the income or property of trust for whose direct or indirect benefit in a denial of the exemption contemplated in section 11 for a charitable or religious trust or institution. The said person are ( a ) the author of the trust or the founder of the institution; ( b ) any person who has made a substantial contribution to the trust or institution, that is to say, any person whose total contribution up to the end of the relevant previous year exceeds Rs. 50,000 ; [ any person whose total contribution to the trust or institution, during the relevant previous year exceeds one lakh rupees, or, in aggregate up to the end of the relevant previous year exceeds ten lakh rupees, as the case may be; W.e.f. 01.04.2025 Substituted vide Section 8 of The Finance Act, 2025 ] ( c ) where such author, founder or person is a Hindu undivided family, a member of the family; ( cc ) any trustee of the trust or manager (by whatever name called) of the institution ; ( d ) any relative of any such author, founder, person ( W.e.f. 01.04.2025 Omitted vide Section 8 of The Finance Act, 2025 ) , member, trustee or manager as aforesaid; ( e ) any concern in which any of the persons referred to in clauses ( a ), ( b ) W.e.f. 01.04.2025 Omitted vide Section 8 of The Finance Act, 2025 ) , ( c ),( cc ) and ( d ) has a substantial interest. Relative - The expression relative in relation to an individual means ( i ) spouse of the individual; ( ii ) brother or sister of the individual; ( iii ) brother or sister of the spouse of the individual; ( iv ) any lineal ascendant or descendant of the individual; ( v ) any lineal ascendant or descendant of the spouse of the individual; ( vi ) spouse of a person referred to in sub-clause ( ii ), sub-clause ( iii ), sub-clause ( iv ) or sub-clause ( v ); ( vii ) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual. Meaning of Substantial Interest Section 13(3) refers to cases where a person has A person shall be deemed to have a substantial interest in a concern,- ( i ) in a case where the concern is a company - if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than 20% of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in section 13(3); ( ii ) in the case of any other concern - if such person is entitled, or such person and one or more of the other persons referred to in section 13(3) are entitled in the aggregate, at any time during the previous year, to not less than 20% of the profits of such concern.