INDIA Law and Practice Contributed by: Rishabh Shroff, Kunal Savani and Chirag Shah, Cyril Amarchand Mangaldas
the paperwork for claims, increase of permissible limit of nominees from three to ten and also enable the named nominees to act on behalf of incapacitated investors. Nomination has been made mandatory for sin- gle account holding and optional for jointly held accounts/folios. Documents like affidavits, indemni - ties, undertakings, attestations, or notarisations from the nominee/s are no longer required post the revamp rules issued by the SEBI. 2.7 Transfer of Assets: Digital Assets 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 in dealing with digital prop - erty upon the death of the account holder and often provide an option for nomination of a “legacy con - tact”. One should examine the policies of the relevant websites and services, based on which one may leave written wishes (including by way of Will) for their fam - ily 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. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Trusts in India are based on the common law princi - ples and are classified under two broad categories being: • private trusts (for family inheritance or private pur - poses); and • public trusts (religious or charitable purposes). Further, under Indian taxation laws and the ITA, trusts can be either irrevocable or revocable and discretion - ary 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 “repre -
sentative assessee” of the beneficiaries – ie, the trus - tees 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 determi - nate or known – ie, whether the trust is a determinate trust or a discretionary trust. In the case of a deter - minate 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 beneficiar - ies, or alternatively, the trustees. Thus, the income of 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 beneficiar - ies. 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 MMR as discussed in 1.5 Stability of Tax Laws . 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 arising to such trust may continue to be taxed in the hands of such settlor. The ITA also provides for certain tax exemptions in the case of trusts registered for charitable purposes. For taxation on trusts registered for charitable purposes under the ITA, see 10.1 Charitable Giving . India also recognises trusts governed by another juris - diction’s laws and which are created for foreign per - sons. Transfer of assets or income to such trusts must be aligned with India’s exchange control regulations. 3.2 Recognition of Trusts Trusts are widely recognised, respected and used as an effective tool of succession and ring-fencing of assets in India. India recognises private as well as public trusts. Private trusts in India are governed by the Indian Trusts Act, 1882, (Trust Act) which primarily governs the rights and obligations of persons acting as settlor,
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