PLC - Private Client Law in India: Overview

PLC - Private client law in India: overview http://uk.practicallaw.
com/1-522-7074#a337083
Private client law in India: overview
Resource type: Country Q&A

Status: Law stated as at 01-Feb-2014
Jurisdiction: India
A Q&A guide to private client law in India.
The Q&A gives a high level overview of tax; tax residence; inheritance tax; buying property; wills and estate
management; succession regimes; intestacy; trusts; co-ownership; familial relationships; minority and
capacity, and proposals for reform.
To compare answers across multiple jurisdictions, visit the Private Client Country Q&A tool.
The Q&A is part of the multi-jurisdictional guide to private client law. For a full list of jurisdictional Q&As visit
www.practicallaw.com/privateclient-mjg.
Megha Ramani and Shreya Rao, Nishith Desai Associates*
Contents
Taxation
Tax year and payment dates
Domicile and residence
Taxation on exit
Temporary residents
Taxes on the gains and income of foreign nationals
Inheritance tax and lifetime gifts
Taxes on overseas real estate and other assets
International tax treaties
Wills and estate administration
Governing law and formalities
Redirecting entitlements
Validity of foreign wills and foreign grants of probate
Death of foreign nationals
Administering the estate
Succession regimes
Forced heirship regimes
Intestacy
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PLC - Private client law in India: overview http://uk.practicallaw.com/1-522-7074#a337083
Trusts
Charities
Ownership and familial relationships
Co-ownership
Familial relationships
Minority
Capacity and power of attorney
Proposals for reform
Online resources
Income Tax Department
Legislative Department
Reserve Bank of India
Taxation
Tax year and payment dates
1. When does the official tax year start and finish in your jurisdiction and what are the tax payment
dates/deadlines?
The official tax year in India starts on 1 April and finishes on 31 March the next calendar year (called
"assessment year" for income tax and wealth tax purposes). Tax is assessed in the assessment year for the
income earned in the immediately preceding financial year (called the "previous year" for tax purposes).
The deadlines for filing income tax returns are:
30 September of the assessment year for a company, or other person (such as an independent trader or
a professional) or working partner of a firm, whose accounts are required to be audited under the Income
Tax Act, 1961 (ITA) or other law.
30 November of the assessment year, for a taxpayer to whom transfer pricing provisions of the ITA apply.
31 July for all other persons.
Domicile and residence
2. What concepts determine tax liability in your jurisdiction (for example, domicile and residence)?
In what context(s) are they relevant and how do they impact on a taxpayer?
Domicile
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Domicile is not a factor for determining tax liability.
Residence
Residence determines tax liability in India and affects the type of income that may be chargeable.
Residence of individuals. For individuals (that is, natural persons), the test for residence is an aggregate
day-count test of physical presence in India. Based on this, individuals can be one of the following:
Resident and ordinarily resident (ROR). An ROR is taxable on his global income. This is income that:
is received in India;
has accrued or arisen in or outside India; and
is deemed under the ITA to be received or to accrue or arise in India.
An individual is an ROR if he is:
present for 182 days or more in a financial year; or
having been present in India for 365 days or more during the four years immediately preceding the
relevant financial year, is present for 60 days or more in that financial year. The 60 day-requirement is
extended to 182 days if the individual is an Indian citizen or a Person of Indian Origin (PIO) residing
abroad who comes on a visit to India during the previous year.
Resident but not ordinarily resident (RNOR). See Question 4.
Non-resident (NR). An NR is taxable only on Indian-sourced income. This is income which:
is received, accrues or arises in India; or
is deemed under the ITA to be received or to accrue or arise in India.
An individual is a NR if he does not meet the day count test for residence (see above). In computing the total
of number of days spent in India, even part of a day is counted as a full day. Both the days of entry into and
exit from India are counted.
Residence of non-natural persons. The residence of non-natural persons (that is, companies and so on) is
determined in the following ways:
A company is resident in India if it is either an Indian company or its control and management is wholly
situated in India in the relevant previous year.
A firm, other association of persons, and every other artificial juridical person is considered resident in
India if the control and management of its affairs is even partly situated in India in the relevant previous
year.
Members of a Hindu family comprising successive generations may be taxed as a separate unit called a
Hindu Undivided Family (HUF). An HUF is considered an ROR if the control and management of its
affairs is even partly situated in India. It will be considered an RNOR if the manager of the HUF meets the
RNOR criteria for an individual (see Question 4).
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A trust is considered resident in India if even a part of its control and management is in India.
The scope of taxable income for non-natural persons based on their residence characterisation is the same
as for individuals (see above, Residence of individuals).
Taxation on exit
3. Does your jurisdiction impose any tax when a person leaves (for example, an exit tax)? Are
there any other consequences of leaving (particularly with regard to individuals domiciled in your
jurisdiction)?
India does not impose an exit tax. Renouncing citizenship does not impact taxation as liability to tax is based
on residence (see Question 2).
An exit tax aims to tax the latent gain arising on assets that an individual transfers to another jurisdiction in
the process of migrating tax residence. Instead of an exit tax for persons leaving India, the ITA provides an
assessment of income of the current assessment year at the current rates in force. This is an exception to
the ITA's principle of taxing income of the previous year at the rates then in force. This method applies when
it appears to the Indian Revenue Service (Income Tax) (Revenue) that an individual may leave India during
the current assessment year, or shortly after it ends and the individual has no present intention of returning
to India.
There is a procedural "leaving obligation" imposed on persons, based on domicile. A person who is not
domiciled in India and has come to India in connection with business, profession or employment and who
has income derived from a source in India, is permitted to leave India only on furnishing an undertaking to
the Revenue that tax payable by him will be paid by either:
His employer.
The person from whom he receives the income.
However, this obligation is not imposed on foreign tourists or those who come to India for reasons
unconnected with business, profession or employment.
Further, a person who is domiciled in India and is leaving India must provide the following details to the
Revenue:
Permanent account number (PAN) (that is, a tax identification number).
The purpose of his visit.
The estimated duration of stay.
Temporary residents
4. Does your jurisdiction have any particular tax rules affecting temporary residents?
For individuals, there is a transitional status between resident and non-resident called "resident but not
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ordinarily resident" (RNOR), which is attained if either of the following tests are met:
The individual is a non-resident in nine out of the ten years preceding the relevant previous year.
The individual has been present in India for 729 days or less during the seven years preceding the
relevant previous year.
In effect, an individual who has been a non-resident for the preceding nine years should be treated as an
RNOR for two years after coming to India and an ordinary resident after the second year.
An RNOR is taxable like an ROR (see Question 2, Residence: Residence of individuals). However, for an
RNOR, income that accrues or arises outside India is included only to the extent it is derived from a business
controlled in or a profession set up in India.
This category is slated to be removed in the proposed Direct Taxes Code (pending Parliamentary approval).
The deletion will mean that worldwide income of such individuals may become subject to Indian tax earlier
than currently prescribed.
Taxes on the gains and income of foreign nationals
5. How are gains on real estate or other assets owned by a foreign national taxed? What are the
relevant tax rates?
Gains that accrue or arise, whether directly or indirectly, to a foreign national through the transfer of a capital
asset (real estate or other assets) situated in India are deemed by the ITA to be sourced in India and are
therefore taxable in India.
The tax rate depends on how long the asset has been held:
Long-term capital gains (LTCG). These relate to gains on the transfer of capital assets that have been
held for more than 12 months (for specified securities) or more than 36 months (for other types of capital
assets). These are taxed at beneficial rates (taxable at 20%).
Short-term capital gains (STCG). These relate to gains on the transfer of capital assets held for less
than the 12 or 36-month durations specified above. These are taxable at the appropriate tax band (10%,
20% or 30%).
Where the capital asset is held through an entity, tax rates will also depend on the type of entity involved.
Specific rates for certain transactions are as follows:
Where an STCG arises on the transfer of an equity share in a company or a unit of an equity oriented
fund listed on a stock exchange (on which securities transaction tax is payable), gains on the transfer are
taxable at 15%.
Where an LTCG arises on the transfer of unlisted securities of a public company, gains are taxable at
10% (without the benefit of indexation and currency fluctuation).
Where an LTCG arises on the transfer of unlisted securities of a private company, gains are taxable at
20%.
Where an LTCG arises on the transfer of an equity share in a company or a unit of an equity oriented
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fund listed on a stock exchange (on which securities transaction tax is payable), gains are tax exempt.
Non-resident Indians (NRIs) (which includes persons of Indian origin (PIOs)) specifically have been
permitted concessional tax rates on investment income from specified assets acquired out of convertible
foreign exchange. NRIs can opt to be taxed under the beneficial provisions even after becoming a resident,
but only until the conversion of such assets into money or another asset.
6. How is income received by a foreign national taxed? Is there a withholding tax? What are the
income tax rates?
Income received by a foreign national is taxed based on residence status (see Questions 2 to 4). Tax rates
depend on the age and applicable tax band.
For all individuals below 60 years of age, the rates are as follows:
For income up to INR200,000: exempt.
Income of INR200,000 to INR500,000: 10%.
Income of INR500,000 to INR1 million: 20%.
Income above INR1 million: 30%.
For individuals between 60 to 80 years of age, the lower threshold for exempt income is raised to
INR250,000.
For individuals of more than 80 years, the lower threshold for exempt income is raised to INR500,000 and
only the 20% and 30% bands remain.
A 10% surcharge has been imposed on persons whose total income exceeds INR10 million for the year
2013-14.
The ITA imposes a withholding obligation on any person who is responsible for paying to a non-resident
(other than a company) or to a foreign company, all payments chargeable to tax under the ITA, other than
those for which the ITA has specific withholding provisions.
Items of income for which the ITA contains separate withholding provisions (both as to chargeability and tax
rate) are salary, payments to non-resident sportspersons or entertainers and certain kinds of interest (among
others). Dividends received are not taxable in the hands of the recipient following the imposition of a 15%
dividend distribution tax as a final tax payable by the company.
If the non-resident does not provide a PAN to the person who has the liability to withhold tax, tax is deducted
at 20% or at the highest rate applicable to the relevant income (whichever is higher).
Inheritance tax and lifetime gifts
7. What is the basis of the inheritance tax or gift tax regime (or alternative regime if relevant)?
India does not impose an inheritance or gift tax regime. Estate duty was repealed in 1985; the government
considered re-introducing it in the 2013-14 tax year, but this was not done. It is unclear when there will be
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any further development on this issue.
Gift tax was imposed from 1958 to 1998. There is currently no gift tax, but from 1 October 2009, income tax
has been imposed on recipients (individuals and HUFs) in the following cases:
The entire sum of money received without consideration is taxed where the sum exceeds INR50,000.
The stamp duty value of immoveable property is taxed where property is received without consideration
and whose stamp duty value exceeds INR50,000.
Where immoveable property is received for inadequate consideration (that is, for less than the stamp duty
value of such property by an amount exceeding INR50,000), the stamp duty value exceeding the
consideration is taxed.
The whole aggregate fair market value of any other property received without consideration is taxed, if the
aggregate fair market value exceeds INR50,000.
Where any other property is received for inadequate consideration (that is, for less than the aggregate fair
market value of such property by an amount exceeding INR50,000), the aggregate fair market value
exceeding such consideration is taxed.
In this context, "property" includes immoveable property (land, buildings or both), securities, jewellery,
sculptures, works of art, bullion and archaeological collections (among the list specified in the ITA).
8. What are the inheritance tax or gift tax rates (or alternative rates if relevant)?
Tax rates
The relevant income tax rates apply (see Question 7).
Tax free allowance
See Question 7.
Exemptions
Monies/properties received (as described in Question 7) from specified persons are tax exempt. These
include monies/properties received:
From specified relations of an individual (defined by statute).
On marriage.
Under a will.
By way of inheritance.
In contemplation of the donor's death.
From a public charitable trust/institution or certain tax-exempt institutions.
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Donations made to certain funds and/or charitable institutions are deductible up to specified thresholds.
Under statute, relatives of an individual include:
The individual's spouse.
The individual's siblings.
Siblings of the individual's spouse.
Siblings of either parent of the individual.
Lineal ascendants or descendants of the individual.
Lineal ascendants or descendants of the individual's spouse.
The spouse of each of the relatives mentioned above.
Techniques to reduce liability
The following techniques to reduce liability are listed below:
Transfer of capital assets under a gift, will or an irrevocable trust is not considered a transfer for the
purposes of imposition of capital gains tax.
Stamp duty is not payable on executing a will or on inheritance but is payable on settlement of assets in a
trust.
Purchasing property through an offshore company located in a treaty jurisdiction (subject to exchange
control regulations).
Structuring a transaction to enable taking benefit of preferential capital gains tax rates than income tax
rates on gifts.
9. Does the inheritance tax or gift tax regime apply to foreign owners of real estate and other
assets?
India does not impose an inheritance or gift tax regime. Income tax on certain transfers with nil or inadequate
consideration (see Question 7) applies to foreign owners if the income received from the assets meets the
test for being sourced in India.
10. Are there any other taxes on death or on lifetime gifts?
There are no other taxes on death or on lifetime gifts.
Taxes on buying real estate and other assets
11. Are there any other taxes that a foreign national must consider when buying real estate and
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other assets in your jurisdiction?
Purchase and gift taxes
Purchasers of non-agricultural immovable property worth over INR5 million must withhold tax at 1% of the
consideration payable to a resident transferor.
Income tax applies to a transfer of assets for nil consideration or for inadequate consideration (see Question
7).
Wealth taxes
A foreign national is liable to pay wealth tax at the rate of 1% on the net wealth (asset value less debt
incurred to purchase that asset), which exceeds INR3 million as at the valuation date (31 March).
Other
Stamp duty is levied on documents effecting specified transfers/conveyances. Depending on the nature of
the conveyance, the stamp duty can take the form of either a fixed duty or be a percentage of the property
value, under the relevant state law.
The percentage of duty varies from 3% to 10% on the fair market value. Stamp duty is usually payable by the
person executing the document, unless the document specifies otherwise.
It is mandatory to register non-testamentary documents transferring, creating or extinguishing a right, title or

interest in immoveable property and the applicable registration fee must be paid. The fee varies among
states and can be a specified fee or a fixed percentage of the consideration subject to a cap.
Further to a recent Supreme Court judgment, some states may impose VAT on flats sold before the
completion of construction.
12. What tax-advantageous real estate holding structures are available in your jurisdiction for
non-resident individuals?
Exchange control laws impose specific restrictions on real estate holding by NRIs, PIOs and non-resident
foreign nationals, especially on direct holding (see below).
Real estate can be indirectly held through participation in equity or debt of a company holding real estate,
provided the company complies with restrictions under the Foreign Direct Investment (FDI) policy.
Exchange control restrictions
Non-resident Indians (NRIs). NRIs (including PIOs) can:
Acquire residential/commercial property through purchase, gift or inheritance.
Acquire agriculture property, plantations and farm houses only through inheritance.
Invest in shares and convertible debentures on a stock exchange of a real estate developer entity
(subject to investment caps).
Purchase unlisted securities on a repatriation basis (subject to conditions on minimum capitalisation,
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lock-in and so on) and on a non-repatriation basis (without any limit or prior permission).
Non-resident foreign nationals. Non-resident foreign nationals can:
Inherit residential or commercial property or agriculture property, plantations and farm houses. However,
when a foreign national, NRI or PIO inherits immoveable property (of any nature) from a person resident
outside India, prior regulatory approval is required and the transferor must have acquired such property in
accordance with the provisions of foreign exchange law that is in force at the time of acquisition.
Acquire residential property through lease for up to five years without prior regulatory approval.
However, non-resident foreign nationals are not permitted to acquire personally (through purchase or gift,
whether singly or jointly with an NRI/PIO) residential or commercial property or agriculture property,
plantations and farm houses.
Taxation
Capital gains tax can be avoided on the acquisition of immoveable property through a gift, will or an
irrevocable trust. The subsequent transferor is subject to capital gains on the entire appreciation. Specific
valuation requirements are imposed.
In case of equity participation in a company holding real estate, dividends are not taxable in the hands of the
recipient (regardless of residence), as the 15% dividend distribution tax is payable by the company.
Withholding tax on interest can be as high as 40%, but lower if invested through a favourable treaty
jurisdiction. Wealth tax is imposed on residential and commercial premises (that is, premises that are not
used as a business asset) located in India.
Taxes on overseas real estate and other assets
13. How are residents in your jurisdiction with real estate or other assets overseas taxed?
Residents are liable to tax on income from overseas assets. If a person is an RNOR (see Question 4),
income that accrues or arises to him from overseas assets is not included unless it is derived from a
business controlled in India or a profession set up in India.
International tax treaties
14. Is your jurisdiction a party to many double tax treaties with other jurisdictions?
India has entered into income tax and capital gains tax treaties with around 88 countries, of which around 85
are currently in force. These include:
The UK
The US.
Singapore.
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Germany.
France.
Japan.
Netherlands.
Luxembourg.
India has also entered into tax information exchange agreements (TIEAs) with ten countries including:
Bermuda.
Bahamas.
BVI.
Jersey.
Guernsey.
Liechtenstein.
India's sole inheritance tax treaty is with the UK.
Wills and estate administration
Governing law and formalities
15. Is it essential for an owner of assets in your jurisdiction to make a will in your jurisdiction?
Does the will have to be governed by the laws of your jurisdiction?
It is not essential for an owner of assets to make a will in India. Testamentary succession to moveables is
governed by the law of the domicile of the owner, and that to immoveable property is governed by the law of
the domicile of the place where the property is located.
16. What are the formalities for making a will in your jurisdiction? Do they vary depending on the
nationality, residence and/or domicile of the testator?
The formalities for making a will depend on the religion of the testator.
For all religions, including those who marry under the Special Marriage Act 1954 (except those Muslims who
have married under customary law), a will must satisfy the following requirements:
The will must be in writing and written by an adult person, who is of sound mind and with free consent (for
details regarding the age of maturity, see Question 43).
The will must be signed by the testator or by some other person in the testator's presence and at his
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direction.
The will must be attested by two or more persons.
The document must be a declaration of intent of the testator with respect to his property.
The document must specify that his intent should be carried out after the testator's death.
There must be a disposition of property under the document. The will should therefore:
clearly set out the properties intended to be transferred; and
set out that the property has been bequeathed without coercion or undue influence.
Case law has held that where one of the natural heirs is to be disinherited, the testator must set out clear
reasons as to why the testator wishes to disinherit such individual.
The will must be dated. If the will is not dated, proof of the day on which the will was executed must be given
at the time when the petition for probate is filed.
Registration of a will is optional and no adverse inference can be drawn against the will in case of
non-registration.
A Muslim who is governed by customary law can make an oral will or a written will. Written wills are not
required to be signed by the testator, attested by witnesses or registered. An adult Muslim of sound mind and
with free consent can make a will. No other formalities are prescribed but the intention of the testator must
be clear.
Redirecting entitlements
17. What rules apply if beneficiaries redirect their entitlements?
An heir can renounce his estate, in which case the property will devolve as per the rules of intestate
succession (see Questions 24 to 29). India does not provide for duality of ownership in case of trusts.
A beneficiary (other than a married woman during her marriage) has a statutory right to transfer his/her
interest, provided the beneficiary is competent to contract. The transferee has the rights and is subject to the
liabilities of the beneficiary in respect of such interest at the date of transfer.
Validity of foreign wills and foreign grants of probate
18. To what extent are wills made in another jurisdiction recognised as valid/enforced in your
jurisdiction? Does your jurisdiction recognise a foreign grant of probate (or its equivalent) or are
further formalities required?
Validity of foreign wills
The Indian Succession Act 1925 provides for the grant of an ancillary probate (that is, the resealing of
probate granted by a foreign court).
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If a foreign will is already proved and deposited in a competent foreign court, an Indian court can grant letters
of administration with a copy of the will annexed. This avoids the necessity of proof of the original will.
Where a foreign will is not proved, the Indian court must take evidence as to the due execution of the will
according to the applicable law based on domicile. The applicable law will depend on whether the will relates
to moveable or immoveable property.
Validity of foreign grants of probate
No right as an executor or legatee can be established in any court unless probate or letters of administration
of the will are obtained, under which the right has been claimed.
For wills executed outside India in respect of which a foreign probate has also been obtained, this
requirement can be met by obtaining an ancillary grant of probate (see above, Validity of foreign wills).
Further, a judgment stated to be a probate granted by a foreign court would fall within the scope of the Code
of Civil Procedure as any other foreign judgment. Under this Code, a foreign judgment is conclusive except
where:
It has not been pronounced by a court of competent jurisdiction.
It has not been given on the merits of the case.
It appears on the face of the proceedings to be founded on an incorrect view of international law or a
refusal to recognise the law of India in cases in which such law is applicable.
The proceedings in which the judgment was obtained are opposed to natural justice.
It has been obtained by fraud.
It sustains a claim founded on a breach of any law in force in India.
Death of foreign nationals
19. Are there any relevant practical estate administration issues if foreign nationals die in your
jurisdiction?
If a foreign will requires a probate/letters of administration, Indian courts typically ask for the
executor/administrator to be present before the court. Furthermore, within six months of the grant of probate
or letters of administration, the executor/administrator must exhibit inventory and accounts containing:
A full and true estimate of all properties in possession.
All credits related to them.
All debts owed to the executor.
The accounts exhibited must show the assets that have come under the executor's hands and must also
depict the manner in which they have been applied or disposed of. The executor must speedily collect all
debts that were due to the deceased at the time of his death. If the debtor avails of the benefit of the
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Limitation Act before such collection, the executor is held personally liable. Considering these, it is advisable
for the executor/administrator to be an Indian resident.
Probate/letters of administration procedures may also require the deposit of a portion of the property with the
court. For this reason, a trust is often created prior to death, to reduce the hassles relating to administration
on death and execution of the testament. However, there is a stamp duty cost for setting up a trust and at
times this option is not recommended, especially when immovable property is involved.
Administering the estate
20. Who is responsible for administering the estate and in whom does it initially vest?
Responsibility for administering
The executor or administrator is responsible for administering the estate.
Probate is mandatory where the testator is a Hindu, Sikh, Jain, Buddhist or Parsi and the will is either:
Executed in certain specified territories (the cities of Calcutta, Chennai and Mumbai).
Executed outside those territories, but relates to immoveable property located within such territories.
Probate is not mandatory if the testator is a Muslim or Indian Christian, even if either of the two conditions
above are satisfied.
The key powers of the executor/administrator are:
The power to dispose of the deceased's property wholly or partly in such manner as the
executor/administrator seems fit. However, the power to dispose immoveable property of a deceased
Hindu, Buddhist, Sikh or Jain is subject to specific restrictions.
The power to incur expenditure on necessary acts for proper care and management of the estate.
The power to sue in respect of all causes of action that survive the deceased and to exercise the same
powers for recovery of debt that the deceased had while alive.
The key duties of the executor/administrator are:
The duty to collect, with reasonable diligence, the property of the deceased and the debts due to him at
the time of his death.
The duty to provide funds for necessary funeral ceremonies in a manner suitable to the deceased's
condition.
Within six months from the grant of probate or letters of administration, the executor/administrator must
provide an inventory to the court. This must contain a full and true estimate of all the property in
possession, credits and debts owed by any person.
Within one year from such grant, provide the court with an account of the estate, show the assets that
have been received and the manner in which they have been applied or disposed off.
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The court has the discretion to grant further time to exhibit the inventory or accounts.
The assent of the executor or administrator is necessary to complete a legatee's title to his legacy. An
executor or administrator is not bound to pay or deliver any legacy until the expiration of one year from the
testator's death.
Vesting
The estate vests in the executor or administrator for representation and administration. Beneficial interest in
the estate vests in the legal heirs.
However, if the deceased was a Hindu, Muhammadan, Buddhist, Sikh, Jain or Parsi (whereby the estate
passes by survivorship), the estate does not vest in the executor or administrator.
21. What is the procedure on death in your jurisdiction for tax and other purposes in relation to:
Establishing title and gathering in assets (including any particular considerations for
non-resident executors)?
Paying taxes?
Distributing? Establishing title and gathering in assets
Establishing title and gathering in assets
No right as executor or legatee can be established in any court, unless a competent court in India has
granted probate or letters of administration. For foreign wills and foreign probate, see Question 17.
A probate/letters of administration petition must be made before the district court in whose jurisdiction the
testator at the time of his death had a fixed abode or where some of his property was situated.
Probate petition. The probate petition (signed by the executor) must be filed together with the will and
contain the following facts:
The time of the testator's death.
A declaration that the will attached is the last will and testament.
A statement that the will was duly executed.
The location and value of assets that are likely to be inherited.
A statement that the executor making the application is named in the will.
The court issues notices to the next of kin of the deceased to file their objections to the grant of probate (if
any). A general public notice is also given in a newspaper. The executor must establish the:
Proof of death of the testator.
Proof that the will has been validly executed by the testator.
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Proof that the will is the last will and testament of the deceased.
On satisfaction that the will in question has been validly executed, the court will grant probate to the executor
named in the will.
Letters of administration petition. A letters of administration petition must state the following:
The particulars about the deceased.
The time of the testator's death.
The petitioner's right to claim.
A statement setting out the value and location of the assets to be inherited.
The petition must also state that to the best of the petitioner's belief, no application has been made to any
other court in relation to letters of administration of the same estate, or if such an application has been made,
the person has no knowledge of the persons by whom it was made, or knowledge of the related proceedings
(if any).
The court will issue a public notice or place an advertisement in newspapers (in English and the local
language, for a period of about 30 to 45 days) to which a person may respond if he has any objection to the
grant of the letters of administration to the applicant.
Procedure for paying taxes
India does not impose estate or inheritance tax.
Distributing the estate
The executor or administrator must collect, with reasonable diligence:
The property of the deceased.
The debts due to him at the time of his death.
Expenses must be then paid in the following order:
Funeral expenses.
Death bed and medical attendance charges.
Expenses of obtaining probate/letters of administration and other judicial proceedings necessary for
administering the estate.
Wages for services rendered to the deceased.
After these, debts of the deceased must be paid in the order of priority if any. If not, they must be paid
equally and rateably.
If the domicile of the deceased was not in India, the application of his moveable property to pay his debts is
16 of 30 19/05/2016, 14:15
to be regulated by Indian law. This does not apply where the deceased was a Hindu, Buddhist, Sikh or Jain.
If there are not sufficient assets to pay all the general legacies in full, they must be diminished in equal
proportions.
In addition, where a person not domiciled in India dies and leaves assets both in India and in the country in
which he was domiciled at the time of his death (the foreign jurisdiction), the executor or administrator in
India can transfer the surplus or residue to that foreign executor or administrator for distribution to persons
residing out of India. He can do this instead of himself distributing any surplus or residue of the deceased's
property to persons residing out of India. However, he must get the consent of the executor or administrator
in the foreign jurisdiction and this transfer for distribution in the foreign jurisdiction can only be done where
there is both:
A grant of probate or letters of administration in India in relation to assets in India.
A grant of administration in the foreign jurisdiction in relation to assets in that jurisdiction.
22. Are there any time limits/restrictions/valuation issues that are particularly relevant to an estate
with an element in another jurisdiction?
No law of limitation governs the application for probate/letters of administration. It must be ensured that all
evidence needed to prove the will in a probate proceeding is in place and that witnesses and the petitioner
are able to appear before the court. See also Question 20.
23. Is it possible for a beneficiary to challenge a will/the executors/the administrators?
Yes, it is possible for a beneficiary to challenge a will.
Where a party objects to the execution of a will/grant of probate or letters of administration, the objector must
be able show that the will was not executed in accordance with the law, by demonstrating one of the
following:
Consent was not free.
Execution of the will was vitiated (that is, the testator did not sign in the presence of attesting witnesses).
Attesting witnesses did not witness the testator's signature.
The bequest is shrouded in suspicious circumstances (either as to the manner of bequest or the
execution of the document).
Where such a challenge to a will is upheld, the bequest will be as per the relevant personal law based on the
religion of the testator.
Succession regimes
24. What is the succession regime in your jurisdiction (for example, is there a forced heirship
regime)?
17 of 30 19/05/2016, 14:15
Indian society has many religious communities, each of which is governed by their personal laws (which may
be wholly codified or partly codified and partly customary) as to substantive matters. Procedural matters are
set out in the Indian Succession Act 1925 (see below, Other religions).
In all cases below, if there is no qualified heir, property transfers to the state.
Hindus (includes Buddhist, Sikh and Jain)
Property of a male intestate Hindu is devolved in the following order:
Class I heirs (son, daughter, widow, mother and certain other relations). Class I heirs take simultaneously
and to the exclusion of others.
Class II heirs (father, siblings and other specified relations). Class II heirs inherit sequentially.
Property of a female intestate Hindu devolves in the following order:
Sons and daughters (including the children of any pre-deceased son or daughter) and her husband.
The heirs of the husband.
Her parents.
The heirs of the father.
The heirs of the mother.
A Hindu can dispose of by will or other testamentary disposition any property that is capable of being
disposed of by him. A will made for the bequest of ancestral property is also valid, if made by the last male
heir.
Muslims
For Sunni Muslims, heirs consist of three classes:
Sharers (that is, those with a defined share, such as parents, children and spouses).
Residuaries (who take the residue after the sharers).
Distant kindred (other blood relations).
For Shia Muslims, heirs consist of two classes:
Consanguineous (that is, blood relations, divided into three classes).
Spouse.
Consanguineous heirs inherit sequentially. The spouse is never excluded and inherits along with the nearest
consanguineous heir. Forced heirship rules apply (see Question 24).
Other religions
18 of 30 19/05/2016, 14:15
The Indian Succession Act 1925 governs succession to property of Christians, Parsis, Jews, persons who
solemnise or register marriages under the Special Marriage Act 1954 (inter-faith marriages) or the Foreign
Marriage Act 1969 (marriage outside India where at least one party is an Indian citizen) and all others.
Under this Act, intestate rules for all persons other than Parsis prescribe that the spouse inherits a one-third
share with the rest to lineal descendants, a half share if there are no lineal descendants but other relations,
or wholly if there are no such relations.
For Parsis, the spouse and children inherit equally. However, if parents are alive then each parent receives a
share equal to half the share of each child.
Residents of Goa
Regardless of the religion of the deceased, the Portuguese Civil Code applies to residents of Goa, which
provides for forced heirship and community property. 50% of the intestate's estate devolves to the spouse
automatically on death while the other 50% devolve to legal heirs.
Forced heirship regimes
25. What are the main characteristics of the forced heirship regime, if any, in your jurisdiction?
India has forced heirship rules under:
Customary Muslim law.
The Portuguese Civil Code, applicable in Goa.
Muslims
Muslims are permitted to will away only one third of their estate to a non-heir (after payment of funeral
expenses and debts). However, it may be possible to will away more if all heirs agree otherwise either:
Before the testator's death (under Shia law).
After the testator's death (under Sunni and Shia law).
Where a Muslim solemnises his marriage or registers it under the Special Marriage Act 1954, he can will
away his entire estate.
Residents of Goa
The rule of forced heirship in the Portuguese Civil Code is as follows:
Spouse only (one-half of estate).
Descendants and spouse (two-thirds).
Descendants only (one-half or two-thirds, depending on number of descendants).
19 of 30 19/05/2016, 14:15
Descendants and spouse (two-thirds).
Parents only (one-half).
Other ascendants only (one-third).
The remainder is freely disposable. If the property is gifted under will or gift, the disposition must not exceed
the disposable quota (50% of the estate). If the disposition exceeds the 50% quota, there is a clawback
provision. Legatees are obligated to include the property bequeathed/gifted to them to determine whether the
disposable quota has been exceeded ("collation").
Avoiding the regime
Under Muslim law, consent of other heirs must be taken. Furthermore, Sharia-compliant trusts can be used
to avoid the limitation on testamentary disposition, unless the settlement is made in anticipation of death.
Under Goan law, properties gifted/bequeathed can be spared from collation if the donor so specifies
expressly in the will/gift instrument or the legatee/done renounces the bequest/gift.
Assets received by beneficiaries in other jurisdictions
Moveable assets are included under the forced heirship regime if the deceased Muslim is domiciled in India
at the time of death.
Mandatory or variable
Forced heirship regime for Muslims is subject to consent (see above, Avoiding the regime).
Real estate or other assets owned by foreign nationals
26. Are real estate or other assets owned by a foreign national subject to your succession laws or
the laws of the foreign national's original country?
Succession is governed as follows:
Moveable property is governed by the law of the domicile of the foreign national.
Immoveable property is governed by the law of the domicile of the place where the property is located.
A person can have only one domicile for the purpose of succession to movable property. If a person dies
leaving moveable property in India, in the absence of proof of any domicile elsewhere, succession to the
property is regulated by the law of India. Once the person is determined to be domiciled in India, the relevant
succession rules will be those applicable to his religion.
27. Do your courts apply the doctrine of renvoi in relation to succession to immovable property?
In the context of a contractual dispute, the Supreme Court has held that the law of contract is not affected by
the doctrine of renvoi.There is no judgment on this issue in the context of succession to immoveable
20 of 30 19/05/2016, 14:15
property.
However, in another decision the Supreme Court observed that every issue relating to immoveable property
should be dealt with by the courts of the country where the property is situated (Vishwanathan v Wajid AIR
1963 SC 1). A leading Indian commentary on conflict of laws has suggested that this observation has the
effect of ruling out the application of renvoi.
Intestacy
28. What different succession rules, if any, apply to the intestate?
See Question 24.
29. Is it possible for beneficiaries to challenge the adequacy of their provision under the intestacy
rules?
It is not possible for beneficiaries to challenge the adequacy of their provision under the intestacy rules,
unless the shares allotted to the beneficiaries are not in accordance with the applicable rules.
Trusts
30. Are trusts (or an alternative structure) recognised in your jurisdiction?
Private trusts are recognised. The trustee is both the legal and beneficial owner of the trust property.
Beneficiaries merely have a beneficial interest, which is the right against the trustee as owner of the trust
property.
Family (private) trusts can be set up either during a person's lifetime or under a will, either orally or by a
written instrument.
Where immoveable property is the subject matter of the trust, the trust must be declared by a registered
written instrument. A trust can be revocable, irrevocable, discretionary, determinate/specific or a combination
of the above. Public charitable or religious trusts are also recognised (see below, Types of trust and
taxation).
Type of trust and taxation
A trust is not a separate taxable unit and the trustee is assessed as the representative assessee (ITA). The
following trusts can be used:
21 of 30 19/05/2016, 14:15
Revocable trust. Income is chargeable to tax in the hands of the settlor. If there are joint settlors to a
revocable trust, the income of the trust is taxed in the hands of each settlor to the extent of assets settled
by them in the trust. For taxation purposes, a trust is considered revocable if the transfer:
contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or
assets to the transferor; or
in any way gives the transferor a right to re-assume power directly or indirectly over the whole or any
part of the income or assets.
Irrevocable determinate (specific) trust. As the beneficiaries are identifiable and their shares are
determinate, a trustee can be assessed as a representative assesse. Tax is levied and recovered from
the trustee in a like manner and to the same extent as it would be leviable on and recoverable from the
person represented by him (the beneficiary). Alternatively, the tax authorities can raise an assessment on
the beneficiaries directly, but in no case can tax be collected twice.
Irrevocable discretionary trust. As the beneficiaries and/or their shares are not determined, the trustee
is charged at the maximum marginal rate (30%). In the case of an offshore discretionary trust with both
resident and non-resident beneficiaries, a trustee should not be subject to Indian taxes. However, if all
beneficiaries of such trust are Indian residents, the trustee may be regarded as the representative
assessee of the beneficiaries and therefore subject to Indian taxes (on behalf of the beneficiaries) at the
maximum marginal rate.
Business trusts. If all the income earned by a trust includes profits and gains of business, the trust may
be considered a business trust and will be taxed on the whole of the income at the maximum marginal
rate (30%).
Public charitable trusts. Income derived from property held under a registered trust wholly for charitable
or religious purposes is tax-exempt (subject to meeting specified conditions).
Residence of trusts
A trust will be resident in India if even a part of its control and management is in India. Further, an offshore
discretionary trust (where the individual shares of beneficiaries are not specified) with only Indian resident
beneficiaries may be at the risk of being considered resident in India.
31. Does your jurisdiction recognise trusts that are governed by another jurisdiction's laws and
are created for foreign persons?
India recognises trusts governed by another jurisdiction's laws created for foreign persons. Transfer of
properties to such trusts must comply with the exchange control regulations (see Question 12).
32. What are the tax consequences of trustees (for example, of an English trust) becoming
resident in/leaving your jurisdiction?
See Question 30.
33. If your jurisdiction has its own trust law:
22 of 30 19/05/2016, 14:15
Does the law provide specifically for the creation of non-charitable purpose trusts?
Does the law restrict the perpetuity period within which gifts in trusts must vest, or the period
during which income may be accumulated?
Can the trust document restrict the beneficiaries' rights to information about the trust?
Purpose trusts
Non-charitable purpose trusts are not recognised.
Perpetuities and accumulations
The law restricts the perpetuity period within which gifts in trusts must vest, or the period during which
income may be accumulated. Under this rule, no transfer of property used to create an interest can take
effect after the lifetime of a person living at the date of such transfer, and the minority of some person who
comes in existence at the expiry of that period, and to whom the created interest will belong when he
reaches maturity (18 years).
However, this rule is not applicable to a transfer of property for the benefit of the public in advancement of
religion, knowledge, commerce, health, safety or any other object beneficial to mankind. A bequest in which
the vesting of the property is delayed beyond the lifetime of one or more persons is not valid except for
charitable bequests.
Accumulation (either wholly or partly) of income from property is not allowed for a period longer than the
lifetime of the transferor, or a period of 18 years from the date of transfer (whichever is later). However, this
rule is not applicable if the transfer is for any of the following:
The payment of the debts of the transferor or any other person taking any interest under the transfer.
The preservation or maintenance of property transferred.
Providing of portions for children (or remoter issue) of the transferor, or of any other person taking any
interest under the transfer.
Similarly, where the terms of a will direct that the income arising from any property will be accumulated either
wholly or in part during any period longer than a period of 18 years from the death of the testator, such
direction is (subject to exceptions) void to the extent to which the period during which the accumulation is
directed exceeds the above period. At the end of such period of 18 years, the property and the income
relating to such property must be disposed of. Exceptions are similar to the exceptions for accumulation of
income from property.
Beneficiaries' rights to information
Trustees must maintain accurate accounts of the trust property, and if requested by the beneficiary, the
trustee must furnish full and accurate information in relation to the amount and the state of the trust property.
In addition, the beneficiary has a statutory right, as against the trustee and all persons claiming under him
with notice of the trust, to inspect and take copies of the:
23 of 30 19/05/2016, 14:15
Instrument of trust.
Documents of title relating solely to the trust-property.
Accounts of the trust-property and the vouchers (if any) by which they are supported.
Cases submitted.
Opinions taken by the trustee for his guidance in the discharge of his duty.
34. Does the law in your jurisdiction recognise claims against trust assets by the spouse/civil
partner of a settlor or beneficiary on the dissolution of the marriage/partnership?
Assets in irrevocable trusts are protected against claims by a spouse/civil partner of a settlor. A trustee is the
legal and beneficial owner of the trust property. Beneficiaries merely have a beneficial interest, which is the
right against the trustee as owner of the trust property.
The ministerial group reviewing the Marriage Laws (Amendment) Bill 2010 had proposed that in a divorce
suit, instead of a fixed 50% share to the wife from the husband's ancestral and non-ancestral property (as
provided), courts should decide the compensation amount for the wife and children from such property. The
version of the Bill as passed by the Upper House of Parliament provides that the court will decide the
quantum of compensation on a case-by-case basis, although inherited property of the husband would be
examined for determining the quantum.
Goa residents are subject to community property rules under the Portuguese Civil Code.
35. To what extent does the law of your jurisdiction allow trusts to be used to shelter assets from
the creditors of a settlor or beneficiary?
Under insolvency legislation, a transfer of property is voidable as against the receiver and can be annulled
by the court if the transferor is adjudged insolvent on a petition presented within two years after the date of
the transfer.
However, this rule does not apply to a transfer that is made before and in consideration of marriage or made
in favour of a purchaser or incumbrancer in good faith and for valuable consideration. Transfer of
immoveable property made with intent to defeat or delay creditors of the transferor is voidable at the option
of the creditors.
Charities
36. Are charities recognised in your jurisdiction?
There is no answer content for this Question, as it is a new addition to the template that did not exist at the
time of writing.
37. If charities are recognised in your jurisdiction, how can an individual donor set up a charity?
24 of 30 19/05/2016, 14:15
time of writing.
38. What are the benefits for individuals when setting up charitable organisations?
time of writing.
Ownership and familial relationships
Co-ownership
39. What are the laws regarding co-ownership and how do they impact on taxes, succession and
estate administration?
India recognises two forms of co-ownership:
Joint tenancy.
Tenancy-in-common.
Joint tenancy
In a joint tenancy, owners have unity of interest that accrues to them by the same conveyance. This interest
commences at the same time and the owners have the same undivided possession. The primary incidence
of joint tenancy is survivorship, by which the entire ownership on the death of any joint tenant remains to the
survivors, and at length to the last survivor who survives to the entire possession. A joint tenancy can be
created only by the acts of parties and not by operation of law.
Tenancy-in-common
In a tenancy-in-common, each owner holds an undivided interest in the property. The interest of a "tenant in
common" does not come to an end on his prior death (that is, there is no right of survivorship). A tenancy in
common could arise by operation of law. For Hindus, in intestate succession, heirs succeed to the estate not
as joint tenants but as tenants in common.
A co-owner of immovable property can transfer his interest in the property to another person. The transferee
acquires, as to the given share or interest in the property, all the rights related to the property. He also gains
the right to enforce a partition of the property necessary to give effect to the transfer. However, the rights are
subject to the conditions and liabilities affecting the share or interest transferred on the date of transfer. The
exception to this provision is that if the transferee acquires a share in a dwelling house belonging to an
undivided family, and is not a member of the family, he does not have the right to joint possession or other
common or part enjoyment of the house.
In the case of heirship of businesses, if the business is continued by one of the heirs for the benefit of all or
by multiple heirs jointly, depending on the intent with which the business is run the business will be taxed as
"a body of individuals" or "an association of persons". The same effect will follow in the case of heirs who
jointly hold property or perform some activity with such property to generate income from it. However, if the
25 of 30 19/05/2016, 14:15
property in the form of shares, securities and so on devolves to the heirs of a deceased, who merely receive
income from such property without doing anything further, such income will be taxed as individual income.
Familial relationships
40. What matrimonial regimes in trust or succession law exist in your jurisdiction? Are the rights
of cohabitees/civil partners in real estate or other assets protected by law?
The spouse has the right to succeed to a share of the property of the deceased. The specific shares vary,
depending on the applicable personal law.
Although, the "right to live together" has been recognised by Supreme Court as being a facet of the "right to
life", in trust or succession laws no matrimonial regime other than marriage exists in India. A state High Court
has recently held that a live-in relationship, will be considered a valid marriage (although this was not in the
context of succession). However, to claim rights under succession, the fact of a valid marriage must be
proved. Courts may make maintenance provisions for cohabitees/civil partners.
A woman living in a domestic relationship has a right to reside in a shared household, whether or not she
has any right, title or beneficial interest in the property. She cannot be evicted or excluded from the shared
household or any part of it by the respondent except in accordance with the procedure established by law.
41. Is there a form of recognised relationship for same-sex couples and how are they treated for
tax and succession purposes?
There is no legislation recognising rights of same-sex couples in the context of taxation and succession.
Marriage legislation does not deal with this issue and same-sex marriages would not be allowed under
personal/customary law of marriages.
42. How are the following terms defined in law:

Married?
Divorced?
Adopted?
Legitimate?
Civil partnership?
Married
The definitions for marriage are defined according to different personal laws, applicable to different religions.
The following laws do not provide a general definition for the term "marriage":
Hindu Marriage Act 1955.
26 of 30 19/05/2016, 14:15
Christian Marriage Act 1872.
Parsi Marriage and Divorce Act 1936.
Special Marriage Act 1954.
Foreign Marriage Act 1969.
Instead, these laws permit marriage to be solemnised (and/or registered) between any two Hindus/Christians
/Parsis/persons/citizens or non-citizen (respectively) and certain substantive and procedural conditions that
must be specified.
Under Muslim personal law, marriage is defined to mean "a contract which has for its object the procreation
and the legalizing of children" (paragraph 250, Mulla's Principles of Mohammedan Law, 19th Ed).
Divorced
The relevant laws do not define the term "divorce". Divorce is understood as dissolution of marriage, other
than by death, upon meeting the substantive and procedural conditions prescribed under statute or under
customary law (for example, in relation to Muslims).
Adopted
For the various religions, the following rules apply to adoption:
For Hindus, adoption is recognised by statute under the Hindu Adoptions and Maintenance Act 1956.
This Act does not contain a general definition of adoption but prescribes the conditions for a valid
adoption.
Parsis are governed by their respective customary laws.
Christians are governed by their respective customary laws.
Muslim personal law as such does not recognise adoption but a Muslim can adopt if a custom permitting
this can be proved.
Foreign nationals can apply to the court to become guardians (but not adoptive parents) under the
Guardians and Wards Act 1890.
In the context of rehabilitating abandoned or homeless children or those in conflict with the law, adoption is
defined as the process through which an adopted child is permanently separated from his biological parents
and becomes the legitimate child of his adoptive parents, with all the rights, privileges and responsibilities
that are attached to the relationship (Juvenile Justice (Care and Protection) Act 2000).
Legitimate
The term "legitimate" is not defined in the relevant laws. However, the Indian Evidence Act 1872 provides
that any person born during the continuance of a valid marriage between his mother and any man, or within
280 days after its dissolution, the mother remaining unmarried, will be conclusive proof that he is the
legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each
27 of 30 19/05/2016, 14:15
other at any time when the child was conceived.
Civil partnership
See Question 40.
Minority
43. What rules apply during the period when an heir is a minor? Can a minor own assets and who
can deal with those assets on the minor's behalf?
In India, the age of majority is 18 years. However, if a guardian of a minor and his property has been
appointed by any court and the superintendence of a minor, and his property has been assumed by a Court
of Wards, the age of majority is extended to 21 years.
A minor can own assets. However, minors cannot transfer property until after they reach majority. When a
minor is the sole executor or sole residuary legatee, letters of administration are granted to the legal
guardian of such minor (or to such other person as the court may think fit) until the minor has reached
majority, at which period (and not before), probate of the will is granted to him.
If there are two or more minor executors and no executor has attained majority, or two or more residuary
legatees and no residuary legatee who has attained majority, the grant is limited until one of them has
attained majority.
Capacity and power of attorney
44. What procedures apply when a person loses capacity? Does your jurisdiction recognise
powers of attorney (or their equivalent) made under the law of other jurisdictions?
Under the Code of Civil Procedure, a minor or a person of unsound mind can sue through a guardian or a
next friend (a court-appointed special guardian). Where such a person is being sued, the court would appoint
a guardian for representation. A trustee must obtain prior court approval to deal with the trust property where
the beneficiary is a minor or a person of unsound mind.
India recognises powers of attorney made under the law of other jurisdictions.
Proposals for reform
45. Are there any proposals to reform private client law in your jurisdiction?
The Marriage Laws (Amendment) Bill 2010 has introduced "irretrievable breakdown of marriage" as a ground
for divorce. It also gives courts the right not to pass a decree of divorce unless it is satisfied that adequate
provision for the maintenance of children born out of the marriage is made consistently with the financial
capacity of the parties to the marriage (see Question 34). This Bill was passed by the Upper House of
Parliament and will lapse if the Lower House of Parliament does not pass it prior to the dissolution of the
Lower House in April or May 2014 in view of the impending national elections.
28 of 30 19/05/2016, 14:15
The Law Commission has made a number of reform recommendations over the years.
Some of the key proposals are:
A definition of the expression "child" should be inserted into the Indian Succession Act 1925, which
includes adopted children in accordance with the personal laws, and illegitimate children.
In relation to laws governing moveable property, it is necessary to provide an exception for cases where
the deceased has, by his will, expressly opted for applying the national law in relation to succession to his
moveable property.
Specific provisions should be introduced to deal with the effect of divorce or annulment of marriage, on
wills.
A repeal of the section on discriminatory probate requirements for wills made by Hindus, Buddhists,
Sikhs, Jains or Parsis.
Compulsory registration of marriages, to bring country-wide uniformity in the law relating to marriage
registration.
*The authors would like to thank M.S. Ananth for lending us the benefit of his experience, and Pankhuri
Sharma and Swapna Chandramouli for their assistance with this article.
Online resources
Income Tax Department
W www.incometaxindia.gov.in
Description. Official website of the Income Tax Department. Website is maintained and updated
regularly.
Legislative Department
W www.indiacode.nic.in
Description. Maintained by the Legislative Department. Website may not be regularly updated.
Reserve Bank of India
W www.rbi.org.in
Description. Official website of the Reserve Bank of India, India's central bank. Website is maintained
and updated regularly.
Resource information
Resource ID: 1-522-7074
29 of 30 19/05/2016, 14:15
Law stated date: 01-Feb-2014
Products: PLC Cross-border, PLC UK Corporate, PLC UK Law Department, PLC UK Private Client, PLC UK Tax, PLC
US Law Department, PLC US Tax, Private Client Global Guide
Series: Country Q&A
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Private client law in India: overview

Resource type: Country Q&A

A Q&A guide to private client law in India.

Megha Ramani and Shreya Rao, Nishith Desai Associates*

Tax year and payment dates

Domicile and residence

Taxes on the gains and income of foreign nationals

Inheritance tax and lifetime gifts

Taxes on overseas real estate and other assets

International tax treaties

Wills and estate administration

Governing law and formalities

Validity of foreign wills and foreign grants of probate

Death of foreign nationals

Administering the estate

Forced heirship regimes

Ownership and familial relationships

Capacity and power of attorney

Proposals for reform

Income Tax Department

Reserve Bank of India

Tax year and payment dates

The deadlines for filing income tax returns are:

31 July for all other persons.

Domicile and residence

Domicile is not a factor for determining tax liability.

has accrued or arisen in or outside India; and

is deemed under the ITA to be received or to accrue or arise in India.

An individual is an ROR if he is:

present for 182 days or more in a financial year; or

Resident but not ordinarily resident (RNOR). See Question 4.

Non-resident (NR). An NR is taxable only on Indian-sourced income. This is income which:

is received, accrues or arises in India; or

is deemed under the ITA to be received or to accrue or arise in India.

The person from whom he receives the income.

Permanent account number (PAN) (that is, a tax identification number).

The purpose of his visit.

The estimated duration of stay.

Taxes on the gains and income of foreign nationals

Specific rates for certain transactions are as follows:

For income up to INR200,000: exempt.

Income of INR200,000 to INR500,000: 10%.

Income of INR500,000 to INR1 million: 20%.

Income above INR1 million: 30%.

Inheritance tax and lifetime gifts

any further development on this issue.

The relevant income tax rates apply (see Question 7).

Tax free allowance

From specified relations of an individual (defined by statute).

In contemplation of the donor's death.

From a public charitable trust/institution or certain tax-exempt institutions.

Under statute, relatives of an individual include:

The individual's spouse.

The individual's siblings.

Siblings of the individual's spouse.

Siblings of either parent of the individual.

Lineal ascendants or descendants of the individual.

Lineal ascendants or descendants of the individual's spouse.

The spouse of each of the relatives mentioned above.

Techniques to reduce liability

The following techniques to reduce liability are listed below:

10. Are there any other taxes on death or on lifetime gifts?

There are no other taxes on death or on lifetime gifts.