Succession & Estate Planning 2026 Comparisons

India’s wealth landscape is undergoing significant transformation. A substantial portion of business wealth continues to stem from resilient family-owned enterprises, but the profile of wealth creators is evolving rapidly. First-generation entrepreneurs and younger wealth creators (including those under 40) are increasingly prominent, particularly in technology and innovation-led sectors. Importantly, wealth creation is becoming geographically decentralised, with tier two and tier three cities emerging as significant centres of new wealth and financial sophistication – expanding the succession-planning market beyond traditional metro-based business families. According to Outlook 2025: India’s Wealth Revolution, tier two and tier three cities now contribute ~35–40% of India’s active investor base, driven by younger demographics, industrial growth and real estate-led prosperity.

Female participation in wealth creation doubled in 2025, with women increasingly active in investment portfolios and entrepreneurial ventures. Women are also leading philanthropy and governance initiatives, often acting as “neutral stewards” who balance family dynamics with professional management. This is driving more women-centric succession and estate planning conversations around leadership, ownership alignment and intergenerational transfer.

Against this backdrop, India is in the midst of a major generational wealth transfer (~ USD1.5 trillion over the next decade), with a high proportion of entrepreneurs intending to pass businesses to family members.

Succession planning has moved from being a private, often deferred family matter to a mainstream strategic priority that promoters and patriarchs now address proactively and more openly. This reflects a clear shift away from informal understandings towards translating intent into formal structures and perpetual succession plans.

Families are increasingly using private trusts, family arrangements and governance frameworks (including family constitutions and charters) to consolidate and distribute assets, ring-fence wealth, protect business interests, institutionalise continuity and reduce the risk of intra-family disputes – particularly relevant in blended family structures. This formalisation is reinforced by heightened awareness of the costs of inadequate planning, including the prevalence of inheritance disputes and the continued lack of formal succession documentation in many business families. Private clients now typically seek professional support from lawyers, wealth managers, family offices and other advisers to build durable structures that support long-term business and employee continuity.

Family-owned businesses contribute ~79% of India’s Gross Domestic Product, one of the highest ratios globally. They also account for ~85% of employment in the private sector, underscoring their dominance in India’s economic fabric. While family-owned businesses continue to shape India’s wealth landscape, India is also witnessing another growing cohort of first-generation entrepreneurs and start-up founders, especially in the technology, fintech and digital services category. Planning strategies for such private clients is typically formulated around liquidity events/IPOs as well as interest protection in the face of private equity investment, usually opting for business trust structures to hold the majority of their wealth.

Notably, Knight Frank’s Wealth Report 2025 found that nearly 18% of India’s high net worth individuals (HNIs) are salaried professionals, a segment growing faster than traditional business-owner wealth. Such salaried HNIs such as senior executives, investment bankers, consultants, successful professionals accumulate wealth through compensation (salaries, stock options, carried interest) rather than business ownership often seek straightforward succession structures that are less demanding when it comes to administration.

India does not allow dual citizenship. Domicile is relevant in India for the purpose of succession to the estate. In India, domicile has an impact on the succession to movable property. As in many countries, domicile in India depends on duration of stay and intention.

Indian courts follow the domicile principle wherein law of deceased’s domicile governs succession to movable assets, while immovable property is governed by the lex situs, or the law of the jurisdiction where the property is located.

All direct tax-related aspects fall under the Income Tax Act, 1961 and/ or the Income Tax Act 2025 (ITA 2025), as may be applicable, and the rules made thereunder, as may be amended, re-enacted or replaced from time to time (and any successor provisions) together with all applicable by-laws, rules, regulations, orders, ordinances, policies and directions issued thereunder, (collectively referred as ITA).

As per the ITA, individuals are subject to tax in India based on their residential status in India. Individuals can be classified as:

• residents;
• non-residents; or
• resident but not ordinarily resident (RNOR).

An individual is considered to be tax-resident in India in any year if:

• the individual stays in India for a period of 182 days or more in a financial year; or
• the individual stays in India for a period of 60 days or more in a financial year and 365 days or more during the preceding four financial years.

In the case of an Indian citizen or persons of Indian origin (PIO) who visits India during the year, or an Indian citizen who leaves India in any financial year as a crew member of an Indian ship or for the purpose of employment outside India, the requirement of having to spend 60 days or more is taken as 182 days.

However, in the case of an Indian citizen or a PIO whose total income (excluding foreign-source income), exceeds INR1.5 million during the relevant financial year, the period of 182 days is reduced to 120 days.

Additionally, an Indian citizen whose total income (excluding foreign-source income), exceeds INR1.5 million during the relevant financial year, is deemed to be a resident of India if they are not “liable to tax” in any other country by reason of domicile or residence or any other criteria of a similar nature.

A tax resident of India is considered to be RNOR if such a taxpayer:

• has been a non-resident in nine out of the ten financial years preceding the relevant financial year; or
• has not been in India for an overall period of 729 days during seven financial years preceding the relevant financial year.

Further, if an Indian citizen or PIO becomes a resident of India upon exceeding 120 days’ stay in India (but does not stay in India for more than 182 days), then such person would also qualify as a RNOR.

Similarly, where an Indian citizen becomes a resident under the deemed residency rules, then such person would also qualify as a RNOR.

While Indian residents are typically taxed on their global income, non-residents are liable to pay income tax only on India-sourced income. Any income which is received or deemed to be received in India or has accrued or arisen or is deemed to accrue or arise in India shall be considered as India-sourced income. RNORs are taxed on their India-sourced income and such foreign income which is derived from a business controlled, or a profession set up, in India.

Recently, the Government of India has notified the ITA 2025, to repeal and replace the existing IT Act, with effect from 1 April 2026. The ITA 2025 does not introduce any policy changes and has primarily been enacted as a simplified, concise and reader-friendly piece of legislation, which does not introduce or change the provisions concerning the tax residency of individuals.

Intestate succession occurs when an individual does not leave a will in respect of their estate. The Indian Succession Act, 1925 (ISA) is applicable to wills of individuals of all religions, other than Muslims.     

The rules applicable for intestate succession are more complicated than the rules for testamentary succession, and are not common for individuals of all religions. The rules of intestate succession differ according to the personal law governing the deceased, which is determined by their religion.

• For Hindus, Buddhists, Jains and Sikhs, the Hindu Succession Act, 1956 establishes a class-based hierarchy whereby Class I heirs (widow, children, mother) inherit simultaneously and equally. Only if no Class I heirs exist do Class II heirs (father, siblings) inherit, followed by agnates and cognates.
• For Muslims, the law of succession is uncodified and derives from the principles of Sharia. These principles are further differentiated across sects and sub-sects. For example, the rules applicable to Sunnis may vary from those governing Shias, and within the Shia community, the rules followed by Bohris may differ from those observed by Cutchi Memons. Muslims are subjected to forced heirship rules as noted in 3.2 Forced Heirship.
• For Christians and Parsis, intestate succession is governed by the ISA. In the case of Christians, the estate is distributed according to statutory schedules, with the widow and children sharing in defined proportions depending on surviving family members. For Parsis, the widow (or widower) takes a share equal to that of one child, with a minimum of half the estate if only one child survives, while lineal descendants inherit per stirpes.

There is no forced heirship regime in India except in relation to Muslims, who are governed by Islamic law, and residents of the state of Goa, who are governed by the Goa Succession, Special Notaries and Inventory Proceeding Act, 2012.

Under Islamic law, a Muslim cannot by a will dispose of more than one-third of the surplus of their estate after payment of funeral expenses and debts. Testamentary dispositions in excess of such one-third limit cannot take effect unless the heirs consent to them, and the modality of obtaining such consent differs from sect to sect.

However, since the introduction of the UCC in Uttarakhand, the principle of fixed shares does not apply to Muslims anymore in Uttarakhand and general rules of succession regarding the estate of a Muslim dying intestate are now applicable. These rules would apply to relatives (of the deceased) specified in Class I and Class II of Schedule 2 of the UCC. Fathers (regardless of their religion) have been recognised as Class I heirs and are eligible to receive property by way of intestate succession in the state of Uttarakhand.

Goa has its own law influenced by its Portuguese history which governs succession to the estate of an individual domiciled or born in Goa. Residents of the state of Goa, regardless of their religion, cannot dispose of more than 50% of their estate (which is automatically transferred to that deceased’s surviving parents). Further, in case the deceased is not survived by their parents, the other ascendants of the deceased will be entitled to inherit one-third of the deceased’s estate.

In India, any property which is self-acquired does not become a jointly owned property by virtue of marriage as India does not follow the principle of communal ownership of property. Only ancestral property is treated differently.

The spouse who owns the self-acquired property can transfer it without the consent of the other spouse. Self-acquired property is protected under Hindu Law, and even the Class I legal heirs of an individual (including their spouse) who have acquired such property cannot claim a share in it during the owner’s lifetime. However, after the owner’s death, the legal heirs can claim a share in the property as per the applicable rules of succession. An individual who owns self-acquired property has the right to dispose of it as per their wishes. The owner can sell, gift or will away the property to anyone they desire.

Portuguese civil law as applicable in the state of Goa recognises the concept of community property wherein both spouses are considered joint owners of the property acquired during the marriage.

The Uttarakhand UCC eliminates the distinction between ancestral and self-acquired property as outlined in Hindu Law, but is silent on the coparcenary rights established by the Hindu Succession Act, 1956. Consequently, the same scheme of succession will apply to both ancestral and self-acquired property for Hindus.

Notably, Indian courts are increasingly grappling with the recognition of homemakers’ contributions in property and succession rights. In 2023, the Madras High Court took a progressive stance, equating a wife’s unpaid domestic work with the economic value of an earning husband, thereby expanding her claim over family property. However, in 2025, the Delhi High Court distinguished this view, ruling that mere residence or household management does not automatically confer ownership rights without proof of substantive contribution. Together, these rulings highlight a growing judicial acknowledgment of homemakers’ value but also underscore the need for legislative reform to establish a clear statutory framework for property rights of non-earning spouses. This reflects a broader trend toward gender inclusivity in succession and property law, though still constrained by the absence of nationwide binding precedent.

Unlike other jurisdictions, India does not recognise the concepts of prenuptial and postnuptial agreements as legally tenable. The law considers such contracts against the public policy of India and therefore they are void ab initio under Section 23 of the Indian Contract Act, 1872. However, this position can be qualified subject to the provisions of the personal and customary law applicable to the parties, and courts may enforce a pre- or post-marital agreement. Recently, courts in India have been attributing limited persuasive value to such agreements, provided that they do not attempt to dictate future separation. Agreements which stick to aspects of asset classification, financial contribution and entitlement may be considered during separation/divorce proceedings on a case-by-case basis.

Under the provisions of the ITA, any transfer of a capital asset under a gift or a will is exempt from capital gains tax.

Further, a gift is tax exempted provided it is made to a person who qualifies as a “relative” under the definition provided under the ITA. However, whilst the definition of “relative” is wide and covers most relationships, a few relationships, like in the case of gifts from nephew to uncle, are not covered under its definition. Hence, a gift which is not covered under the purview of the definition shall be taxed. For the definition of relatives, see 6.2 Tax and Regulatory Constraints.

There is no estate or inheritance tax in India. Further, property received under a gift or will or inheritance is exempt from capital gains tax. Hence, any property whatsoever can be passed down to next generations tax free via a will or even intestacy.

India does not undertake revaluation or rebasing of assets that have been inherited. The Indian tax laws allow receivers of such assets to carry forward the period of holding and cost of acquisition from their previous title owner. Thus, the income arising from the transfer of such inherited assets shall be taxable in India in a similar way that of its previous title owner.

Private trusts are widely recognised, respected and used as an effective tool of succession and ring-fencing of assets in India. India recognises both – private as well as public trusts. PwC India Family Business Survey 2025 notes that nearly 40% of family businesses have already set up private trusts to hold equity stakes, real estate and family assets. 38+ billionaires have ~25% of their combined wealth (~INR32.52 trillion being ~USD357.4 billion) secured in private trusts as per a recent Fortune India report.

Notably, private trusts in India are governed by the Indian Trusts Act, 1882, which primarily governs the rights and obligations of persons acting as settlor, trustees and beneficiaries of a private trust. Private trusts are a popularly chosen vehicle of succession and are established for holding joint family assets such as immovable property, shares of a family business, family jewels and so on. Members of the family are made beneficiaries of such family trusts in order to ensure a seamless intra-generational transfer of family-owned wealth.

Lifetime gifts are also common due to absence of gift and estate taxes, and are widely used for progressive transfer of business equity, real estate and financial assets. A limitation comes in the form of irrevocable transfer and state stamp duty on immovable property.

The Hindu Undivided Family (HUF), which is separate taxable entity available to Hindus, Buddhists, Jains and Sikhs, creates an additional tax exemption limit for income-splitting amongst family members and is commonly used by traditional families for holding ancestral property.

In order to prevent any misuse and prevent any income from escaping assessment, certain anti-avoidance provisions have been introduced to stipulate that where any person received money or property for no consideration or for a consideration which is less than fair market value, then such difference between fair market value and consideration would be subject to tax under the heading “Income From Other Sources”. This has been done in order to prevent the practice of receiving money or property without consideration or for insufficient consideration from unknown persons. The term “property” under this provision includes immovable property, being land or buildings or both, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art or bullion.

Accordingly, if a gift is made to a third party, then it would be regarded as “income from other sources”, which is akin to a gift tax, and tax would be chargeable on such gifts made to third parties.

However, to provide benefit of tax exemption to genuine cases, an exemption from taxation for gifts made to “relatives” is provided. The following individuals would qualify as relatives for the purposes of ITA:

• in the case of an individual:
1. spouse of the individual;
2. brother or sister of the individual (or their spouse);
3. brother or sister of the spouse of the individual (or their spouse);
4. brother or sister of either of the parents of the individual (or their spouse);
5. any lineal/maternal ascendant or descendant of the individual (or their spouse); and
6. any lineal ascendant or descendant of the spouse of the individual (or their spouse); and
• in the case of a Hindu undivided family, any member thereof.

It is pertinent to note that the term “relative”, as used in the aforementioned provision, has been further clarified under the ITA 2025. The Act now explicitly includes both maternal and paternal ascendants of an individual, as well as those of the individual’s spouse, within the scope of “relative”. This clarification is expected to conclusively address and eliminate any interpretational ambiguities.

Disclosures of Foreign Assets

When an Indian resident is a beneficiary/settlor/trustee in a foreign trust then that person is required to report details of all foreign assets or accounts held at any time during the relevant calendar year ending on December 31, in Schedule FA (Details of Foreign Assets and Income from Any Source Outside India) of their income-tax returns. Resident investors must disclose all foreign assets or accounts in respect of which they are beneficial owners, beneficiaries or legal owners. This disclosure requirement is comprehensive and covers the following:

• accounts held in foreign depositories;
• accounts maintained with foreign custodians;
• investments in foreign equities and debt instruments;
• insurance or annuity contracts held abroad;
• holdings in foreign entities;
• other capital assets held abroad (excluding stock-in-trade and business assets);
• foreign accounts in which the taxpayer holds signing authority;
• trusts established under the laws of a country outside India in which the taxpayer serves as trustee, beneficiary or settlor;
• foreign immovable property holdings; and
• any other income derived from foreign sources.

To facilitate it further and encourage transparent regularisation of disclosures, the Federal Budget 2026 proposes a time-bound declaration scheme, namely the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (the “Scheme”), for specified foreign income and assets. The Scheme offers eligible taxpayers a one-time opportunity to voluntarily declare foreign holdings or income that were either unintentionally omitted or not previously subjected to tax, upon payment of the prescribed tax or fee. Upon such declaration, the declarant shall receive immunity from additional tax liability, penalties and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. However, cases involving criminal proceedings or assets linked to illicit sources will fall outside the scope of the Scheme.

In this context, where Indian citizens are involved in the structuring, it is necessary for them to take into account the aforementioned disclosure requirements. Further, such beneficiary, being an Indian resident, will be taxed on their global income, which will include the income they receive from such trust as a part of their share as a beneficiary.

India does not have a law governing the transfer or transmission of digital assets such as email accounts, and there is currently no unified approach to their “inheritance” or access by heirs. Service providers have their own policies for dealing with digital property upon the death of the account holder and often provide an option for nomination of a “legacy contact”.

In October 2025, the Madras High Court delivered a landmark judgment recognising cryptocurrency as “property” under Indian law, marking the first time an Indian court has explicitly classified Virtual Digital Assets (VDAs) as property capable of ownership and trust. This recognition allows holders/investors to seek remedies under property law (injunctions, misappropriation claims etc), expanding legal recourse beyond contract or regulatory frameworks. It also opens the door for integration of VDAs into succession planning, private trusts, and family office structures. This means Indian HNIs can now ringfence crypto holdings alongside traditional assets like equity, real estate and family businesses, ensuring continuity across generations. That said, nationwide application of this ratio may require statutory reform or Supreme Court affirmation.

The Digital Personal Data Protection (DPDP) Act, 2023 recognises a right to nominate under Section 14, read with Rule 14(4) of the DPDP Rules, 2025 when it comes to the digital assets of a user. This provision allows users to designate a nominee who can step into their digital shoes, managing their online accounts and data after their death or incapacity. However, these nominations would have to be made in accordance with the platform’s policies. This provision would come into effect from May 2027.

Private clients should examine the policies of the relevant websites and services, based on which they may leave written wishes for their family on how they would want their digital material to be accessed and treated after their demise, and align the legacy contacts, if nominated, with their bequests.

Notably, Indian business families prefer to undertake business through various types of entities. Popular vehicles for business entities in India include partnerships, LLPs and companies.

Noteworthy Succession-Related Aspects

Partnerships and LLPs

Succession to partnership interest in the partnership firm and in the LLP is typically dealt with according to the provisions of the requisite constitutional documents (being partnership deeds/LLP deeds). While the applicable law provides flexibility to structure the succession of partnership interest, it becomes important to ensure that the relevant constitutional documents are aligned with the testamentary instruments of private clients. Professional service family businesses (law firms, accounting firms, consultancies) increasingly use LLP structures, which offer flexibility in profit sharing, easier partner entry/exit, and limited liability.

Company

Succession of the shareholding in a company is typically dealt with according to the wills of private clients unless such shares are already moved to private trust structures. It becomes important to ensure that such testamentary instruments are aligned with the respective nominations.

From an estate planning standpoint, discretionary private trusts continue to be the preferred vehicle with an increasing number of Indian family businesses (listed as well as unlisted) now adopting private business trusts to hold promoter-level shares and other business assets.

Beyond entity structures, Indian family businesses show a marked preference for control retention strategies such as holding trusts, differential voting rights and family governance agreements, with growing emphasis on governance best practices as businesses mature across generations. Families are also embracing family constitutions (charters), which set out governance aspects, succession eligibility and next-generation entry rules. In addition, shareholders’ agreements and voting agreements are being used to formalise promoter branch rights and obligations, including exit provisions, rights of first refusal and voting arrangements.

There are no estate, inheritance or generational-skipping taxes in India. Taxation of relevant entities is set out below.

• Taxation of partnerships and LLPs – the income of a partnership firm and an LLP is taxed at a flat rate along with the applicable surcharge and cess and accordingly, the distribution of such income to the partners is not subject to tax in the hands of the partners. This significantly simplifies the overall tax burden as well as the legal and compliance requirements.
• Company taxation – the income of a domestic company varies depending upon the regime chosen by such company. Further, dividends paid out by the company are taxed in the hands of the shareholder. 
• Taxation of discretionary trusts – please refer to 10.2 Taxation of Trusts.

It is worthwhile to note that income from long-term capital assets is taxed at a flat rate plus applicable cess and surcharge for all such entities (partnership firms, LLPs, companies and private trusts).

As noted in 6.1 Common Planning Techniques, private trusts are the preferred vehicle for estate and succession planning.

Promoters/business families who set up private trusts often bequeath their business assets and holdings (to the extent held by them personally) under their wills in favour of such trusts for the benefit of their family members who are beneficiaries.

For a private trust involving non-residents, the extant provisions of the Foreign Exchange and Management Act, 1999 (FEMA) and the rules and regulations thereunder need to be evaluated, as private trusts are treated as pass through-entities under FEMA.

Charitable organisations are often used as sophisticated structures for undertaking philanthropic and non-profit activities as a part of the larger wealth plan as opposed to being primary vehicles for estate and succession planning. They can be established in the form of public trusts, societies or Section 8 companies under the Indian Companies Act, 2013, each with distinct governance and flexibility features, but all serving the purpose of advancing charitable objects. Public Trusts provide continuity and concentrated control, societies enable broad-based participation, and Section 8 companies offer stability with corporate-style governance.

India does not have a single, unified legislation governing “charity”. Instead, charitable entities are regulated under a patchwork of central and state-specific laws, with frameworks varying depending on the type of organisation and the state of incorporation. At the central level, laws such as the Charitable and Religious Trusts Act, 1920, the Religious Endowments Act, 1863, and the Charitable Endowments Act, 1890 provide broad oversight, while states like Maharashtra and Gujarat have enacted their own public trust statutes.

It has been observed that tax authorities, who had previously adopted a more liberal interpretation of residency rules, have now begun undertaking deeper scrutiny, applying a stricter interpretation to reassess the resulting tax liability. In this regard, there have been precedents wherein the tie-breaker rules provided under applicable tax treaties have been invoked in conjunction with domestic residency rules to determine the tax residence of individuals with cross-border connections.

Further, there have been significant judicial rulings that have re-emphasised the principle of substance over form in investment structures. Courts have consistently held that the true nature of a transaction must be determined by looking beyond its legal form to its economic substance. Consequently, tax authorities have been scrutinising arrangements more rigorously to assess the tax liability of taxpayers, particularly in cases involving complex holding structures, conduit arrangements, and transactions that appear to lack commercial rationale. This heightened scrutiny extends to the examination of structures including its the genuineness, and the overall commercial substance employed by taxpayers in their succession and wealth planning structures.

In India, corporate trustees are commonly used for private trusts. While not mandated by law, corporate trustees generally follow higher standards than individual trustees, favouring pragmatism and professionalism. Corporate trustees’ role, remuneration and liabilities are set out in the trust deed. Typically, they are not liable for losses or costs from good faith decisions if they act without bad intentions. Such protective clauses are common, even in private family trusts, offering comfort to trustees.

Wealth management companies are often preferred corporate trustees in India, especially when investing trust funds for a fee. Judicial forums in India recognise and allow the piercing of the corporate veil as provided under the Companies Act, 2013 to hold responsible officers accountable for fraud or default.

There are no specific laws for companies providing trusteeship services to private trusts. There is also no embargo against formation of professional trusteeship companies in India. Such corporate trustees follow the Indian Trusts Act, 1882, the trust deed and other applicable laws.

Trusts in India are based on the common law principles and are classified under two broad categories being:

• private trusts (for family inheritance or private purpose); and
• public trusts (religious or charitable purpose).

Further, under taxation laws and the ITA, trusts can be either irrevocable or revocable and discretionary or determinate.

Trusts are not recognised as a separate taxable unit under the ITA. However, the ITA provides that, in the case of a trust, trustees would be taxed as a “representative assessee” of the beneficiaries – ie, the trustees would be taxed in the same manner in which the beneficiaries would have been taxed.

The taxability of the trustee depends on whether or not the share of the beneficiaries in the trust is determinate or known – ie, whether the trust is a determinate trust or a discretionary trust. In the case of a determinate trust (ie, where the name and share or interest of the beneficiary is known or determinable), the tax officer has the option to either assess the beneficiaries, or alternatively, the trustees. Thus, the income of the trust may be assessed at the option of the tax officer, either in the hands of the beneficiary or in the hands of the trustee(s) as a representative of the beneficiaries. In the case of a discretionary trust (ie, where the share/interest of the beneficiaries is unknown or left to the discretion of the trustees), the trustee(s) would be liable as a representative of the beneficiaries, at the maximal marginal rate (MMR).

Further, in the event a settlor transfers the property to a trust under such provisions that any part of the income or assets so transferred may be retransferred to the settlor, such a trust is treated as a revocable trust under the ITA. In the case of a revocable trust, the income of such trust may continue to be taxed in the hands of such settlor.

Thus, if the settlor retains any powers over a trust, even if the terms of the trust deed consider such trust to be an irrevocable trust, it shall be considered a revocable trust under the ITA. For instance, even if the settlor does not directly retain any unfettered powers over the trust property but has the right to exercise such powers subject to meeting certain contingencies (such as by obtaining consent of any named person), then such trust would be deemed to be a revocable trust. Accordingly, it is critical to ensure that no such powers are directly or indirectly retained by the settlor.

The ITA provides that all income of any person, received by virtue of a revocable transfer, shall be chargeable to tax as the income of the transferor. On the other hand, in the case of an irrevocable trust, since the settlor no longer maintains any control over the trust property, such settlor is not taxed on the income of the trust property. Despite this, revocable trusts remain a popular structuring choice amongst families in India for succession planning. This is because such a trust allows settlors to retain a certain amount of control and oversight over their assets in order to ensure that interests of their family members are protected. Settlors will often retain the power to add or remove beneficiaries and decide in what proportion distributions are made. 

The ITA provides for certain tax exemptions in the case of trusts registered for charitable purposes, wherein such charitable purposes included relief of the poor, education, medical relief, etc.

There are many ways in which a person can undertake charity in India. All of the structures have more or less similar incentives and exemptions. The definition and governing law regarding the charities varies depending on type of structure set up for charitable purposes.

Income of charitable trusts and institutions, registered under the ITA, is exempt from tax, subject to certain conditions such as:

• application of income for charitable purposes in India;
• filing of timely income-tax returns; and
• adhering to conditions set forth in the certificate of registration, etc.

Only trusts or institutions incorporated in India are eligible for this exemption. Further, income of such trust or institution must be applied wholly for charitable or religious purposes within India.

In order to encourage charitable giving, the donors making donations to charitable trusts or institutions registered under the ITA are allowed deductions for the amount of donations made by them, thereby reducing their taxable income. The deduction can be claimed up to a maximum of 50% or 100% of the donated amount, depending on the institution or fund to which the donation has been made.

The ITA 2025 has simplified and reorganised the existing tax laws with respect to trusts, without introducing substantial changes. The revisions primarily streamline provisions, ensuring better clarity while maintaining the existing framework.

Accordingly, the ITA 2025 retains the fundamental classifications of revocable and irrevocable trusts, as well as determinate and indeterminate trusts. Further, the ITA 2025 would continue to exempt trusts at the time of settlement of assets, where such trust has been created by an individual for the sole benefit of their relatives. Hence, the existing estate planning structures and family offices established would continue to be taxed in the same manner – ie, the income of determinate trusts would be taxed in like manner and to the same extent in the hands of the beneficiaries, and the income of discretionary trusts would be taxed at the MMR.

Indian law does not recognise same-sex marriage. The Supreme Court in Supriyo @ Supriya Chakraborty v Union of India (2023) declined to grant marriage equality, leaving same-sex couples without spousal status. Consequently, same-sex partners have no automatic succession rights under any personal law (Hindu, Muslim, Christian, or Parsi succession acts). A same-sex partner can only inherit if explicitly named as a beneficiary in a valid will.

Similarly, civil partnerships/live-in relationships are not statutorily recognised in India (except in the state of Uttarakhand since February 2024). However, the courts have recognised the rights of adults to live together consensually by opining that applicable law creates a presumption in favour of marriage and against concubinage when long-term cohabitation has taken place between the couple over an extended period of time and renders such a partnership as akin to marriage.

The Uttarakhand UCC, while recognising live-in relationships, makes it obligatory for a man and woman, who are living in the state of Uttarakhand, regardless of whether they are residents of Uttarakhand or not, to submit a “statement of the live-in relationship” to the appointed official for registration. Children born from such live-in relationships are considered as legitimate, and such children will enjoy the same rights and benefits as they would from legally wedded parents. Uttarakhand UCC also mandates payment of maintenance, similar to marriage, in case the woman is deserted by her partner in a live-in relationship.

Under prevalent Hindu personal laws in India, there is no differential treatment for children born out of wedlock, adopted children, surrogate children or posthumously conceived children. Such children are regarded as Class I heirs of the deceased and therefore are not subjected to any disparity as far as inheritance to the estate of the deceased is concerned.

Under the Hindu Adoption Act, 1956, from the date of adoption, the child is under the legal guardianship of the new adopted parent(s) and thus should enjoy all the benefits from those family ties. This also means that this child, therefore, is cut off from all legal benefits (eg, property and inheritance) from the family who had given them up for adoption.

Similar to other commonwealth countries, India’s private international law principles are largely judicially developed rather than codified, creating uncertainty in cross-border holding and transfer of assets as well as succession.

Foreign divorce decrees may not be recognised in India unless parties were domiciled in that jurisdiction. In such cases, Indian courts apply principles of comity and recognise foreign decrees where proper jurisdiction existed, natural justice was followed, and the decree is not contrary to Indian public policy.

When a foreign national dies while domiciled in India with Indian assets, or an Indian domiciliary has foreign assets – Indian courts follow the domicile principle wherein the law of deceased’s domicile governs succession to movable property and lex situs or the law of the land governs immovable property.

Indian courts have not recognised same-sex marriages, even if validly contracted abroad, for succession purposes. Foreign same-sex spouses have no automatic inheritance rights under Indian personal laws. Similar rationale applies to civil partnerships that are validly recognised abroad.

To circumvent the uncertainty rendered due to conflicting laws across the world, high net worth individuals with multi-jurisdictional assets execute separate wills for assets in different countries – the Indian will governs Indian assets under Indian law and the foreign will governs foreign assets under lex situs.

Offshore trusts holding Indian movable assets would be administered/governed by trust jurisdiction law rather than Indian personal law, subject to the provisions of the trust deed. 

There is no estate tax currently being levied in India and nor are there any indications that any such estate tax will be introduced in India. However, it is noted that Indian families usually have some tax exposure in other jurisdictions, especially in US or UK where the estate laws are wider. Accordingly, Indian tax advisers must co-ordinate with foreign tax advisers to evaluate such tax exposures and suggest mitigating steps.