INDIA Law and Practice Contributed by: Roshnek Dhalla, Bijal Ajinkya, Moin Ladha and Shailendra Bhandare, Khaitan & Co
It is in such scenarios that a family arrangement may be entered into between all the relevant family mem- bers, where, through mutual agreement, everyone agrees to a clear and fair division of the title in various family assets, thereby making well-defined demarca - tions and providing clear titles in respect of each asset to avoid disputes. 10.2 Legal and Fiscal Issues in Artwork Succession The testamentary succession of artworks presents a multifaceted set of legal considerations. Histori - cally, Indian succession law mandated the obtaining of probate in certain jurisdictions (such as Chennai, Kolkata and Mumbai), which often resulted in delays in the transfer of title and created administrative com - plexities for heirs. However, this requirement has now been done away with, and probate is no longer man - datory in any jurisdiction in India. While this change reduces procedural burdens and expedites succes - sion in many cases, it also places greater onus on beneficiaries to establish clear title, particularly in the absence of judicial validation of the will. Accordingly, in certain situations – especially involving high-value assets such as artworks – obtaining probate may still be advisable to ensure legal certainty and mitigate the risk of future disputes, and in practice financial institutions or counterparties may require probate as evidence of clear and marketable title. Another pertinent issue is determining the testator’s final wishes, especially where multiple wills are pro - duced by potential heirs. Furthermore, artworks may also be subject to certain regulatory restrictions – for instance, the Antiquities and Art Treasures Act stipu - lates special permits as necessary for the transfer of artwork. This regulatory overlay creates an additional layer of compliance requirements beyond standard succession procedures, impeding the transmission of artefacts to the legatees. On the other hand, intestate succession of artworks in India leads to a different set of issues. In India, intes - tate succession is dealt with under the personal law that may be applicable to the individual (based on religious faith). More often than not, these personal laws identify multiple legal heirs having an equal right over the deceased’s estate. This may result in a frag -
mented ownership of the artwork, eventually result - ing in disputes or disposal thereof to monetise such fragmented ownership, which might not necessarily be aligned with the wishes of the deceased. After the demise of the intestate, the executors or administrators of the estate assume the custodial responsibility for artefacts – a role that demands spe - cialised knowledge of preservation techniques and appreciation of artistic and emotional significance. Executors or administrators lacking such expertise risk causing irreversible damage to valuable pieces. 10.3 Tax Implications of Artwork Gifts and Donations The Indian Income Tax Act, 1961 governs taxation in respect of gifts or donations of properties. By way of recent legislative development, the Income Tax Act, 2025 (the “Indian IT Act”) has been introduced to replace the 1961 legislation, and was proposed to come into effect from 1 April 2026. However, the tax treatment in relation to gifts and donations of artworks remains largely unchanged. The Indian IT Act provides that the receipt of a “prop - erty” by any person, without consideration or for inad - equate consideration, shall be chargeable to tax at the fair value of such “property”. Accordingly, in the case of a gift/donation, the entire fair value of the “prop - erty” is deemed to be the recipient’s income, which is chargeable to tax at the ordinary income tax rates. The term “property” has been defined under the Indian IT Act as including, inter alia, “drawings, paintings, sculptures, or any work of art”. Further, property also includes in its meaning “jewellery”, which has been defined in a broad manner to even include articles (such as furniture, utensils, etc) that may be made of precious or semi-precious stones/metals. The broad definition of the term “property” with respect to artworks is likely to cover all forms of artis - tic works and thereby subject the gift thereof to tax. However, as an exception to this rule, certain gifts have been exempted from tax: • gift of artwork between “relatives” (as defined under the Indian IT Act);
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