INDIA Trends and Developments Contributed by: Akshika Harikrishnan, Mohona Thakur and Nikhil Asrani, Khaitan & Co
ments. Whether motivated by a sense of gratitude or a commitment to social impact, they are seeking to con - tribute to Indian non-profit organisations, educational institutions and community development initiatives. However, this growing interest has been accompanied by procedural difficulty in making such donations/ endowments due to the complexity under the For - eign Contribution (Regulation) Act 2010 (FCRA) and related compliances. Unlike NRIs, donations received from PIO and OCI (although of Indian origin) are treat - ed as foreign contributions and can be made only to organisations who have a valid FCRA registration or prior permission to receive such funds. This restricts the receipt of endowments from such individuals and obtaining permission or FCRA registration is cumber - some, time consuming and subject to stringent scruti - ny. Amendments bringing parity to PIO and OCI when compared with NRIs (in genuine cases) and ensuring a more transparent framework can channel a substan - tial amount of philanthropic capital into India. Crossing borders: changes impacting India Outward migration from India for education, employ - ment, business or having an alternate residency/gold - en visa for travel or lifestyle purposes is a growing trend in India. Conversely, the authors are also see - ing several NRIs returning to India post-retirement, to take care of elderly parents or for business purposes. Changes in overseas jurisdictions and tightening of laws in countries such as the US and the UK are also influencing the decision to return to India. • Several non-UK domiciled individuals moved outside of the UK with the abolishment of domicile- based taxation and introduction of the residence- based tax regime with effect from 6 April 2025. A number of them have moved backed to India after undertaking planning of their overseas assets to ensure a more seamless and tax efficient succes - sion structure. • The uncertainty in the US and tightening of immi - gration laws, potential termination of the EB-5 programme and introduction of the gold card by increasing investment from a minimum of USD800,000 to USD5 million slims the chances of obtaining permanent residency. With a Liber - alised Remittance Scheme (LRS) limit of a mere
USD250,000 per person, the foreign exchange restrictions also make this challenging unless funds are available overseas. The proposed 1% remit - tance tax for non-US citizens will also impact funds remitted from the US to India for investment, family maintenance and expenses. Inheritance tax in overseas jurisdictions such as the US and the UK impacts the assets and inheritance received in India. Several individuals are undertaking planning through Wills, trusts and insurance policies to minimise the exposure of overseas inheritance tax and proactively plan for the proposed re-introduction of estate duty in India. Navigating tax and regulatory laws and arriving at a structure which is compliant from Indian and overseas standpoints is the key to achieving the desired objectives. Proposals such as the US Death Tax Repeal Act and the UK reconsider - ing inheritance tax on non-domiciled individuals also need to be considered. Indian law: key private client regulatory developments Insurance: nomination vs succession rights In 2015, the Insurance Act 1938 was amended to provide that a nominee who is a close relative (being parents, spouse or children) is entitled to receive the proceeds from an insurance policy to the exclusion of legal heirs, thereby making a clear distinction between beneficiary nominees and custodian nominees. In a recent case, the Karnataka High Court in Neelavva v Chandravva held that nominations under insurance policies cannot override the succession rights of legal heirs under personal laws. Here, the mother was the nominee of the deceased policyholder. The widow and minor son filed a suit claiming a share in the insurance proceeds. The Court held that the nominee does not have absolute ownership, and the insurance benefits should be equally divided amongst the mother, widow and son according to succession laws. In light of this judgment and to avoid disputes, policy - holders should take proactive steps to align nominees and capture their intentions through a Will.
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