INDIA Law and Practice Contributed by: Rishabh Shroff, Kunal Savani and Chirag Shah, Cyril Amarchand Mangaldas
7. Succession of Digital Assets 7.1 Legal Framework
owners. This disclosure requirement is comprehensive and covers the following: • accounts held in foreign depositories; • accounts maintained with foreign custodians; • investments in foreign equities and debt instru- ments; • insurance or annuity contracts held abroad; • holdings in foreign entities; • other capital assets held abroad (excluding stock- in-trade and business assets); • foreign accounts in which the taxpayer holds sign- ing authority; • trusts established under the laws of a country out- side India in which the taxpayer serves as trustee, beneficiary or settlor; • foreign immovable property holdings; and • any other income derived from foreign sources. To facilitate it further and encourage transparent regu- larisation of disclosures, the Federal Budget 2026 pro- poses a time-bound declaration scheme, namely the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (the “Scheme”), for specified foreign income and assets. The Scheme offers eligible taxpayers a one- time opportunity to voluntarily declare foreign hold- ings or income that were either unintentionally omitted or not previously subjected to tax, upon payment of the prescribed tax or fee. Upon such declaration, the declarant shall receive immunity from additional tax liability, penalties and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. However, cases involving criminal proceedings or assets linked to illicit sources will fall outside the scope of the Scheme. In this context, where Indian citizens are involved in the structuring, it is necessary for them to take into account the aforementioned disclosure requirements. Further, such beneficiary, being an Indian resident, will be taxed on their global income, which will include the income they receive from such trust as a part of their share as a beneficiary.
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 for dealing with digital property upon the death of the account holder and often pro- vide an option for nomination of a “legacy contact”. In October 2025, the Madras High Court delivered a landmark judgment recognising cryptocurrency as “property” under Indian law, marking the first time an Indian court has explicitly classified Virtual Digital Assets (VDAs) as property capable of ownership and trust. This recognition allows holders/investors to seek remedies under property law (injunctions, misappro- priation claims etc), expanding legal recourse beyond contract or regulatory frameworks. It also opens the door for integration of VDAs into succession plan- ning, private trusts, and family office structures. This means Indian HNIs can now ringfence crypto holdings alongside traditional assets like equity, real estate and family businesses, ensuring continuity across genera- tions. That said, nationwide application of this ratio may require statutory reform or Supreme Court affir- mation. 7.2 Planning Considerations The Digital Personal Data Protection (DPDP) Act, 2023 recognises a right to nominate under Section 14, read with Rule 14 (4) of the DPDP Rules, 2025 when it comes to the digital assets of a user. This provision allows users to designate a nominee who can step into their digital shoes, managing their online accounts and data after their death or incapacity. However, these nominations would have to be made in accordance with the platform’s policies. This provi- sion would come into effect from May 2027. Private clients should examine the policies of the rel- evant websites and services, based on which they may leave written wishes for their family on how they would want their digital material to be accessed and treated after their demise, and align the legacy con- tacts, if nominated, with their bequests.
85 CHAMBERS.COM
Powered by FlippingBook