INDIA Law and Practice Contributed by: Rishabh Shroff, Kunal Savani and Chirag Shah, Cyril Amarchand Mangaldas
2.2 International Planning The Indian foreign exchange regime restricts and qual - ifies the movement of capital assets overseas. Remit - tance of assets overseas from India – by both resident individuals and non-resident Indians (NRIs) is subject to regulatory controls imposed by the Reserve Bank of India (RBI). In practice, advisers typically undertake a detailed mapping of the family’s asset base, resi - dency profile and intended jurisdictions at the outset, in order to identify the applicable regulatory pathway and structure cross-border transfers in a compliant and tax-efficient manner. With the growth of businesses and families on a global stage and the international presence of multiple fam - ily members, a huge number of families are opting to create an irrevocable discretionary trust or a grantor trust through which they hold their assets in order to save them from tax implications in multiple jurisdic - tions, with suitable advice from multi-jurisdictional professionals. In a case where the parents are Indian residents and the children are tax residents in the US, the parents cannot transfer the property directly to the children as that would attract US tax on such assets, because the US charges a tax on global income in addition to inher - itance and estate tax. In such a scenario, the parents set up an irrevocable discretionary trust in India with themselves as beneficiaries and the children as sec - ondary beneficiaries after their death. Typically, such grantor trusts are not subject to tax in the US while the primary beneficiaries are alive. Upon the demise of the primary beneficiaries, no probate or any regulatory approvals are required for securing the rights of the secondary beneficiaries to the trust property. Overseas remittances by NRIs who receive distri - butions from India which are credited to their non- resident ordinary (NRO) accounts (ie, onshore Indian accounts held by NRIs) are governed by the provi - sions of the Foreign Exchange Management Act, 1999 (FEMA). For most cases, such remittances are quali - fied and are subject to an annual limit of USD1 million out of their corresponding NRO accounts. Overseas remittances made by resident individuals out of their ordinary resident accounts are capped at USD250,000 per person, per annum, under the Liberalised Remit -
hail from. They are governed by the specific legisla - tions or personal laws and customs which have a huge influence on how individuals and families approach succession. In India, the possibility of a Uniform Civil Code (UCC) being made applicable to all citizens, irrespective of their religious denomination, has increased. The state of Uttarakhand became the first state to pass their state-specific UCC in 2024, followed by the states of Gujarat and Assam in 2026. The implications of the UCC on forced heirship, marital property and live-in relationships are discussed further in 2.3 Forced Heir- ship Laws , 2.4 Marital Property and 9.3 Cohabitation and Unmarried Couples , respectively. Lately, India is moving away from the general con - sideration of any discussion on succession planning being considered taboo in India (culturally perceived to be reserved for the “ultra-wealthy”). An increasing portion of the population, especially the younger and middle-aged section, is understanding the importance of estate and succession planning and is seeking professional assistance in order to set up adequate, sustainable inter-generational structures. Helpful reg - ulatory changes pertaining to simplifying nomination across various assets is also contributing to this pro - gression, by reducing paperwork and the friction in the actual passing on of financial assets. Corporate India continues to focus on building a robust governance by professionalising key manage - rial roles by inducting experts in the field who are not a part of the family into the family business. The trend of private equity firms and financial investors acquiring management control, controlling stakes and running companies has been gaining ground over the years. Family businesses are seeking to strike a balance between keeping the blood lines close and triumphing a merit-based system. Recent years have also seen nuanced family splits by way of executing amicable family settlement agreements, brand-usage agree - ments and non-competes which aid in the seamless division of business operations.
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