₹4.62 crore vs ₹3.75 crore: How much retirement corpus is enough in India?

Parents looking to pass on investments and property to their children have two commonly used succession-planning options: gifting assets during their lifetime or transferring them through a Will. However, the better route depends on several factors, including control over assets, tax and stamp duty.

According to Bijal Ajinkya, Partner at Khaitan & Co, both Wills and gifts are effective tools for succession and passing on a legacy. The appropriate option depends on the individual’s intent, the likelihood of a Will being contested, the need to retain access to.

What Happened

For Indian residents with assets in India, gifts to close relatives are generally not subject to income tax, although stamp duty may apply. Assets inherited under a Will are also not subject to income tax or stamp duty.

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Key Details

However, once the assets are transferred, any income generated from them would be subject to tax in the hands of the children. A gift of immovable property requires a gift deed, while movable assets can be gifted without one.

• The firm noted that disputes and prolonged litigation around contested Wills are common, contributing to trusts becoming an increasingly preferred succession and estate-planning tool.

• According to Khaitan & Co, trusts can provide asset protection from matrimonial or creditor claims, safeguard assets against potential estate taxes and allow staggered access and control.

• Instead of transferring assets directly, families may consider gifting or bequeathing them to a private trust established for the children.

Why It Matters

The gift deed must be appropriately stamped and registered under applicable state laws. Certain states provide concessional stamp duty rates when residential or agricultural property is gifted to close relatives.

• The tax rules in the child’s country of residence must also be examined, particularly on income generated by the inherited or gifted assets.

• A Will does not face the same consideration, as an Indian resident can bequeath assets to both residents and non-residents.

What Reports Say

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