Site navigation

An individual holds 12% of the voting shares of a company and his brother holds 10%. The company employs the individual’s wife. Does the individual have a substantial interest in the company for…

Question and options

An individual holds 12% of the voting shares of a company and his brother holds 10%. The company employs the individual’s wife. Does the individual have a substantial interest in the company for section 99 of the Income-tax Act, 2025?

  1. Yes, as his own holding exceeds 10%

  2. Yes, as his and his brother’s holdings total 22%

  3. No, as a brother’s holding cannot be counted

  4. No, as his own holding is below 20%

Answer and explanation

Correct answer: B - Yes, as his and his brother’s holdings total 22%

Under section 99(5)(a)(iii) of the Income-tax Act, 2025, an individual has a substantial interest in a company if shares carrying at least 20% of the voting power are held by him alone or jointly with one or more relatives. A brother is a relative under section 2(94), so the 12% and 10% holdings together exceed the 20% threshold.

Practice for these exams

Related exam syllabi

More solved explanations in Income tax - basic concepts, residence & heads of income