4.2 Bringing consistency in the provisions relating to payment to specified person

i) Under section 13 of the Act, trusts or institutions under the second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. It is proposed to insert twenty first proviso in clause (23C) of section 10 of the Act to provide that where the income or part of income or property of any trust or institution under the first regime, has been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13, such income or part of income or property shall be deemed to be the income of such person of the previous year in which it is so applied. The provisions of sub-section (2), (4) and (6) of section 13 of the Act shall also apply to trust or institution under the first regime.

ii) This amendment will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years.

[Clause 4]

 

Payment to specified person: income applied for their benefit deemed their income, anti benefit rules extended to first regime trusts. A proviso to clause (23C) of section 10 deems any income or property of a first regime trust applied for the benefit of a person in section 13(3) to be that person's income in the year of application; sections 13(2), (4) and (6) are made applicable to first regime trusts, aligning anti benefit and attribution rules across regimes.