Have there been any notable recent developments in the provision of private client and offshore services in your jurisdiction, including any regulatory changes or case law?
Some of the key changes to the Indian legal regime that affect the private client practice include the following:
- Transfer of listed securities to trust: In December 2017 the Securities and Exchange Board of India set out the conditions that private trusts should comply with if it is intended that the trust hold listed shares of promoters.
- Exemption regarding taxation of trusts: The Finance Act 2017 (fiscal legislation that amends the Income Tax Act 1961 annually) enacted an exemption, whereby there shall be no tax in the hands of the recipient (ie, beneficiaries) so long as the trust is created for the benefit of the ‘relatives’ (defined to include spouse, parents, children and siblings, among others).
- Enactment of the General Anti-avoidance Rules: Effective April 1 2017, the General Anti-avoidance Rules shall empower the tax authorities to tax, re-characterise or deny tax benefits arising from ‘impermissible avoidance transactions’.
- Income Disclosure Scheme: In 2016 the government provided a short window of opportunity to citizens to declare their undisclosed income.
- Enactment of the Black Money Act: In 2015 the government enacted the Black Money Act to deal with the problem of undisclosed foreign income and assets.
- Reporting financial transactions: In 2015 a provision was included in the act to require specified financial transactions to be reported in a prescribed format. This addition was to harmonise Indian legislation with the US Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard.
- Exchange controls: Since India has stringent exchange controls that regulate capital convertibility, the Reserve Bank of India frequently updates the rules relating to inward and outward remittances that an Indian resident may receive or make offshore to non-residents.
- Insolvency Code: In 2016 a comprehensive insolvency and bankruptcy code was enacted that replaced other legislations dealing with bankruptcy and insolvency. Although not yet in force, the code also deals with insolvency resolutions for individuals.
Residence and domicile
How is residence/domicile determined for tax liability purposes in your jurisdiction?
As per the Income Tax Act 1961 an individual is said to be an Indian tax resident in a given financial year (April 1 to March 31) if he or she satisfies either of the following conditions:
- He or she is in India for 182 days or more in that financial year; or
- He or she was in India for 365 days or more during the four years preceding the financial year and is in India for 60 days or more in that financial year.
However, the Income Tax Act provides for specific instances wherein the 60-day threshold is increased to 182 days for the purposes of the second condition above. This increased threshold applies when the individual is:
- an Indian citizen and leaves India in any previous year for the purposes of employment outside India; or
- either an Indian citizen or a ‘person of Indian origin’ living outside India who comes for a visit in India in any previous year. An individual is a person of Indian origin if he or she, or either of his or her parents or grandparents, was born in undivided India.
The concept of domicile/citizenship is not relevant for tax purposes. Instead, the Income Tax Act uses specific categories – ‘residents’ (taxed on their global income), ‘residents but not ordinary residents’ and ‘non-residents’ (both taxed on income sourced in India).
Describe the income tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).
India follows a scheduler system of taxation, whereby income is categorised as:
- business income;
- capital gains;
- income from residential property; or
- income from other sources.
The corporate tax rate is 30% (reduced rates apply to limited cases), and individuals are subject to progressive slab rates – the highest being 30% (additional surcharge and cess applicable). A separate scheme of tax applies to capital gains and dividends.
An imputational system applies to tax dividends, whereby the company declaring the dividends is subject to a tax at 20.36% (effective rate applying a gross-up basis). Shareholders receiving such dividend are subject to no further tax other than non-corporate, resident shareholders who are subject to a 10% tax on aggregate dividends received above Rs1 million.
Residents (companies and individuals) are taxed on their worldwide income with necessary credit, subject to the satisfaction of certain conditions for foreign taxes paid. Non-residents are taxed in India on their income sourced in India. Importantly, India has entered into several double taxation avoidance agreements that apply to the extent that it is beneficial to the taxpayer.
Detailed, comprehensive provisions exist regarding reliefs and deductions for providing incentives to specific industries (eg, manufacturing incentives, special economic zones), as well as businesses (eg, depreciation, adjustments for foreign exchange fluctuations and indexation, amortisation).
In terms of compliances, taxpayers must file their income tax return annually, and obtain a permanent account number.
Describe the capital gains tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).
In order to incentivise capital import, capital gains on sale of assets in some cases are accorded a lower tax rate. The determining factors for the rate depends on the period of holding, the nature of the asset and the seller.
Period of holding
Listed equity shares held for one year or less are treated as short-term assets, others are treated as long-term assets. However, unlisted shares and immoveable assets are short-term assets if they are held for two years or less, and long-term assets if they are held for more than two years. For all other assets, the period of holding is three years.
The table below summarises the applicable tax rates (additional surcharge and cess may apply).
Listed shares sold on-market on or before March 31 2018 (ie, on the floor of the stock exchange) where a securities transaction tax (STT) is paid both at the time of acquisition and sale of the shares
Listed shares sold off-market
10% (without indexation)/ 20%
Non-residents, however, are subject to a 10% rate on the long-term capital gains arising from the sale of unlisted shares, whereas short-term capital gains are taxed at the rate of 30% (individuals) or 40% (corporates) on the sale of the asset.
The recent Finance Bill 2018, announced by the Finance Minister on February 1 2018, proposes a new capital gains tax regime effective April 1 2018 for the sale of listed shares (among some other capital assets). A 10% tax will apply on long-term capital gains arising from the sale of assets above Rs100,000 provided that STT was paid at the time of acquisition of the shares. The proposal prescribes a formula for ascertaining the cost of acquisition and provides a limited grandfathering whereby a step-up in basis shall be provided as of January 31 2018.
The Income Tax Act provides beneficial provisions, whereby individuals reinvesting long-term capital gains from the sale of residential property, subject to the satisfaction of certain conditions.
Inheritance and lifetime gifts
Describe the inheritance and gift tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).
There is no inheritance or gift tax in India. The estate duty and gift tax legislations were abolished in 1985 and 1998 respectively, due to both their ineffectiveness in achieving their purpose and rising administrative costs.
What taxes apply to individuals’ acquisition and disposal of real estate in your jurisdiction?
Real estate may be held as an investment (capital asset) or as stock-in-trade (business asset). Depending on the characterisation of income and the length of time for which the real estate is held in case of a capital asset, either a 20% (long term) or a 30% tax rate shall apply to resident taxpayers. Further, in case of individuals, certain roll-over benefits may apply in case of long-term capital gains.
Exchange controls restrict the Indian real estate held by individuals. For instance, non-resident Indians (NRI) and foreign nationals cannot hold or acquire agricultural land (unless inherited). Similarly, an NRI cannot undertake real estate business in India.
Additionally, each state in India levies stamp duties on the transfer and conveyance of real estate. Certain concessions are accorded in some states if gifts are made among family members.
Non-real estate assets
Do any taxes apply to the acquisition and disposal of other assets apart from real estate?
Yes, if the moveable asset is held as investment, then capital gains tax shall apply. Alternatively, such sale or disposal may be taxed as business income or income from other sources. In the latter case, the recipient is taxed at 30% where inadequate or no consideration has been paid.
Further, stamp duties are applicable based on local legislation and the nature of the asset sold.
Other applicable tax regimes
Are any other direct or indirect tax regimes relevant to individuals?
The Goods and Services Tax Act (in force since July 1 2017) has replaced erstwhile indirect taxation laws. The comprehensive goods and services tax system provides for the taxation of services, and goods consumed and provided/sold by individuals as specified therein.
Are there any special tax planning considerations for individuals with a link to your jurisdiction?
An individual’s taxes can be planned in a legally compliant and efficient manner using various structures. Some of these include:
- Trusts – creating irrevocable and discretionary private family trusts for relatives to protect personal wealth from liabilities, and to ensure a smooth mechanism for the inter-generational transfer of assets. Similarly, setting up public charitable trusts that are exempt from income tax for undertaking philanthropy. Further, offshore trusts may also be set up to ensure that high net worth individuals (HNIs) have an offshore asset base.
- Lifetime gifts – executing gift deeds of real estate during the lifetime of the HNI to avail the lower stamp duties applicable in some states.
- Residential status – availing the benefits of remittance offered to Indian residents and NRIs both from an exchange control and tax perspective. For instance, an Indian resident may repatriate Indian funds up to $250,000 in a financial year (April 1 to March 31). Upon migration and converting their Indian resident accounts to NRI accounts, they could thereafter repatriate up to $1 million as capital. Therefore, considerable pre-immigration planning may be undertaken.
- Roll-over benefits – individuals may reinvest their long-term capital gains in real estate, subject to applicable conditions to avail exemptions.
- Hindu undivided families (HUF) – drawing from customary Hindu law, traditionally families have structured their assets and wealth in HUF entities that act as pooled vehicles for investments.
Trusts, foundations and charities
Are trusts legally recognised in your jurisdiction? If so, what types are available and most commonly used?
Yes, both private and public trusts (charities) are recognised in India. While planning the succession of family assets, irrevocable and discretionary trust structures are common for the following advantages that they confer during the settlor’s lifetime:
- smooth transition of assets and flexibility to make distributions based on specific needs of beneficiaries;
- providing for family members with special needs;
- strong governance mechanism to administer trust property;
- asset and creditor protection;
- spousal protection in case of matrimonial disharmony;
- protection against potential inheritance tax or estate duty;
- flexibility to adopt professionalised management and administration of trust assets; and
- limited role of court/judicial bodies.
What rules and procedures govern the establishment and maintenance of trusts?
The Indian Trusts Act 1882 governs the creation and operation of private trusts. The Trusts Act must be read in conjunction with applicable real estate, tax and securities law that prescribe the procedure for the valid creation of the trust and settlement of assets into the trust. Similarly, public trusts (charitable and religious) must adhere to the applicable rules prescribed by the state legislations pursuant to which they are set up in addition to the Charitable and Religious Trusts Act 1920, the Religious Endowments Act 1863 and the Charitable Endowments Act 1890.
Although not rules per se, some considerations to be mindful of while setting up trusts are outlined below:
- Parties to a trust: Ideally, all three parties should not be the same person. Necessary perspectives should be harmoniously balanced while identifying the parties (settlor/contributor, trustee or beneficiary). For instance, from a securities perspective, it is advisable that the trustee and beneficiary in some cases be individuals who belong to the promoter group. From a tax perspective, in an irrevocable trust there should be no overlap between settlor and beneficiary.
- Registrations: Mandatorily, a case where immoveable property is settled into a trust, the trust deed must be registered and adequate stamp duties paid.
- Regulator consent: At times, prior consent of the regulator may apply if there are sectoral regulations on whether a trust may own property and, if it may, the quantum of such assets as well as the eligibility criteria of the trustee (legal owner of the trust property) and consequent reporting – for instance, transfer of non-banking financial companies holding more than 50% of passive assets and earning more than 50% of passive income or shares of a private sector banking company above prescribed limits.
- Tax and corporate compliances: From a tax perspective, the trust must obtain a tax identification number and file annual tax returns. Further, the trustee must also undertake necessary steps to comply with the US Foreign Account Tax Compliance Act, the Common Reporting Standard and corporate law based on assets owned by the trust.
- Land regulations: If the trust owns agricultural or plantation land, the land laws that set out the eligibility for holding such land, as well as applicable exchange controls, must be complied with if NRIs are parties to the trust.
How are trusts taxed in your jurisdiction?
In India, trusts are not separate legal persons. From a tax perspective, the Income Tax Act prescribes a separate mechanism to tax trusts based on their nature.
Revocable v irrevocable trusts
In a revocable trust (akin to a grantor trust), the transferor has the power to re-assume the asset that has been settled in the trust, whereas the settlor of an irrevocable trust has no such powers. In case of the former, the income of the trust is taxed in the hands of the settlor.
Discretionary v determinate trust
In a discretionary trust, the trustee has powers to make distributions of the trust property to the beneficiaries. No beneficiary has any earmarked or crystallised interest in the trust property, whereas the interest of a beneficiary in the trust property is pre-determined and specified.
In case of an irrevocable discretionary trust, the income of the trust is taxed in the hands of the trustee (who is the legal and beneficial owner of the property) or the beneficiaries as their representative assessee in the same and like manner.
In case of an irrevocable determinate trust, the income of the trust can be taxed in the hands of either the trustee or the beneficiaries to the extent of their interest in the trust, but never both. Once the income is taxed, in the hands of either the trustee or the beneficiary (as in case of a determinate trust), no further tax applies when the income is distributed.
The taxable event that may arise during the life of the trust has been detailed below:
- Creation of trust – from the transferor’s perspective, any transfer of a capital asset to an irrevocable trust is exempt from any capital gains tax. From the transferee’s perspective, any income or property received from an individual by a trust created or established solely for the benefit of ‘relatives’ (as defined) of the individual is exempt from the purview of tax.
- Term of trust – the Income Tax Act provides that the income of a discretionary trust is assessable to tax at the maximum marginal rate (ie, 30%, exclusive of any surcharge and cess). However, capital gains earned by such a trust from disposal of the capital assets held by it should be taxed at the beneficial rates (if any) specified in the Income Tax Act. All income arising to a business trust is taxed at the maximum marginal rate. Therefore, it is advisable that separate trust structures be created for investment and business purposes. Further, the roll-over benefits applicable to individuals and Hindu undivided families are not extended to trusts.
- Distribution of trust property (income and/or corpus) – since income received by the trustee would have been subject to tax already in the hands of the trustee, such income shall not be taxed again once in the hands of the beneficiaries at the time of actual distribution of such income. Corpus distributions made to beneficiaries should not be taxed either.
Foundations and charities
Are foundations and charities legally recognised in your jurisdiction? If so, what forms can they take?
Foundations are not recognised in India. Charities are organised as public trusts, societies or non-profit companies.
What rules and procedures govern the establishment and maintenance of foundations and charities?
Public trusts in India are governed by central/federal legislations such as the Charitable and Religious Trusts Act, the Religious Endowments Act and the Charitable Endowments Act, in addition to state-specific legislation (eg, Maharashtra state).
How are foundations and charities taxed?
So long as the charitable institution has been set up for a ‘charitable object’ for the benefit of the general public utility, and at least 85% of the said institution’s income is applied toward charitable purpose, and the remaining 15% is being invested in furtherance of the Income Tax Act, such income of the charitable institution is not subject to tax.
Anti-avoidance and anti-abuse provisions
What anti-avoidance and anti-abuse tax provisions apply in the context of private client wealth management?
Some overarching general anti-abuse rules empower the Indian tax authorities to declare an arrangement an ‘impermissible avoidance arrangement’, which entitles the authorities to disregard the legal form of the transaction, structure or arrangement and determine instead the tax based on the substance of the transaction. The Income Tax Act also includes specific anti-avoidance rules that are relevant to note:
- Revocable transfers to trust – despite the nomenclature, if the settlor or any contributor has retained the power to control the trust property (by way of revesting the property in themselves or assuming control over it), then the tax authorities may consider the trust to be a revocable trust.
- Clubbing of income – where assets are transferred to others while retaining the ownership or providing for a revocable transfer, then income from such assets continue to be taxed in the hands of the transferor/taxpayer. Similarly, the Income Tax Act provides for cases where income from assets transferred to spouses or minor children are clubbed with the transferor’s tax base.
Anti-money laundering provisions
What anti-money laundering provisions apply in the context of private client wealth management (eg, beneficial ownership registers)?
The ruling political regime has given teeth to existing anti-money laundering laws in the recent past. India has criminalised money laundering under both the Prevention of Money Laundering Act 2002 and the Narcotic Drugs and Psychotropic Substances Act 1985. The recent enactment of the Benami Transaction Prohibition (Amendment) Act 2016 tackles the popular malpractice of splitting legal and beneficial ownership. Some key changes enacted include:
- limiting the exemptions to the Benami Act to include, among others, directors of a company, trustees, executors of a will, spouse and children;
- expending the meaning of the term ‘property’;
- clarifying the powers, jurisdiction and role of the authorities under the Benami Act;
- providing penalties, including imprisonment and fines;
- defining the procedure and powers of prosecuting authorities; and
- enabling a special court to take cognisance of the offences committed under the Benami Act.
While there is no single beneficial register maintained in India, some instances where legal ownership must be divulged include the following:
- The Income Tax Act mandates reporting of ownership of interest in foreign entities, property, accounts by residents in their annual tax returns;
- There is a public register of records maintained when there is a conveyance of legal title of immoveable property; and
- Some corporate compliances require that beneficial ownership of shares be declared annually to the Registrar of Companies.
Wills and probate
What rules and restrictions (if any) govern the disposition of and succession to an individual’s property and assets in your jurisdiction?
The personal law of every religious sect governs the disposition of and succession to an individual’s property and assets in India.
The concept of domicile applies to limited cases (for individuals other than Hindus and Muslims) with regard to the succession of moveable property. The principle of lex situs otherwise governs the succession of immoveable property.
What rules and procedures govern intestacy?
Intestate succession is governed by personal law in India, whereby the customary rules of each religious sect apply in relation to succession, matrimony, guardianship and related matters. For instance, Hindus, Jains, Buddhists and Sikhs are governed by the Hindu Succession Act 1956, Islamic law applies to Muslims and Christians, and Parsis are governed by the Indian Succession Act 1925. Each branch of personal law (often a mix of customary and codified law) specifies the rules and restrictions in relation to the transmission of assets (eg, Islamic inheritance laws has forced heirship rules). Similarly, such laws specify the procedure for succession; these must be read in conjunction with applicable civil laws.
What rules and restrictions (if any) apply to the governing law of a will?
Testamentary succession is governed by the provisions of the Indian Succession Act. These provisions must be read in conjunction with applicable rules of evidence, as well as real estate laws in case of immoveable property.
What are the formal and procedural requirements to make a will? Are wills and other estate documents publicly available?
Typically, for the execution of an Indian will to be valid, the following conditions must be satisfied:
- The place of execution stated in the will must be uniform;
- The will must be attested by at least two witnesses; and
- Each of the witnesses must:
- see the testator sign or affix his or her mark to the will or must see some other person sign the will in the presence of and by the direction of the testator; and
- receive from the testator personal acknowledgment of his or her signature.
The testator and the witnesses must sign the will; the witnesses must sign in the presence of the testator.
Under good practice:
- it is preferable for the testator and the witnesses to initial all pages of the will; and
- the testator must review/revise the will annually.
The Indian Succession Act stipulates the cases where a probate is mandatory in order to enable the transmission of the testator’s assets. The provision unequivocally states that no right as an executor or legatee can be established in any court unless a probate or letters of administration has been obtained of the will under which the right is claimed if:
- the will is prepared by a Hindu;
- on or after September 1 1870; and
- within the territories of the erstwhile presidency towns of Calcutta, Bombay and Madras (now Kolkata, Mumbai and Chennai) or to the extent that the will relates to immovable properties situated therein.
If a probate is required, then the Indian Succession Act further stipulates the detailed procedural formalities that should be complied with.
Unless registered with the sub-registrar or contested in a court, a will or probate is not publicly available.
Validity and amendment
How can the validity of a will be challenged? Can the will be amended after the decedent’s death?
A will may be amended or changed by the testator during his or her lifetime by means of a codicil. It is important to register the codicil as well if the will has been registered.
How is the validity of a will established in your jurisdiction?
If mandated by the Indian Succession Act, the validity of a will is established by means of a probate obtained from a court of competent jurisdiction.
To what extent are foreign wills recognised? Do any special rules and procedures apply to establishing their validity in your jurisdiction?
As per the Indian Succession Act, when a will has been proved and deposited in a court of competent jurisdiction situated beyond the limits of India, and a properly authenticated copy of the will is produced, letters of administration may be granted by an Indian court of competent jurisdiction to enforce such will.
What rules and procedures govern:
(a) The appointment of estate administrators?
The Indian Succession Act provides for detailed rules for the appointment of an administrator of the deceased’s estate, both in case of testamentary and intestate succession.
In case of wills, a probate shall be granted only to an executor who is named expressly or by necessary implication, so long as the executor is competent to contract in case of an individual or a qualified company. In the absence of an executor, a universal or residuary legatee may be admitted proving the will. If no such person is available, then the intestate succession laws applicable to the testator apply.
(b) Consolidation and administration of the estate?
The executor or administrator has broad powers to deal with the estate to implement the terms of the will.
(c) Distribution of the estate to heirs?
The executor is duty-bound to distribute the estate of the deceased to the heirs as per the will. The Indian Succession Act grants the executor wide-ranging powers to make such distributions and deal with varied scenarios (eg, if a legatee disclaims interest in the estate).
(d) Settlement of the decedent’s debts and payment of any taxes and fees?
The Indian Succession Act lays out the cardinal rule that all the debts, dues, taxes, fees and expenses must be paid from the estate of the deceased before a distribution can be made to the heirs.
Are there any special considerations specific to your jurisdiction that individuals should bear in mind during succession planning?
Individuals prefer either to set up succession structures during their lifetime, as opposed to preparing testamentary instruments that may get challenged upon demise or undertake lifetime gifts. However, if stamp duties and transfer costs are high then certain assets (eg, immoveable property) can pass to heirs through a will.
Today, since India does not have an estate duty law, and keeping in mind the low intervention of courts, high net worth individuals tend to prefer trust structures to plan the succession of their assets.
Capacity and power of attorney
Loss of capacity
What rules, restrictions and procedures govern the management of an individual’s affairs where he or she loses capacity and the grant of power of attorney in such cases?
A power of attorney may be granted to an individual having sound capacity to deal with the property of the incapacitated person. Incapacitated persons (other than minors) may, under the Mental Health Act 2017 make an advance directive in writing regarding the manner in which such person wishes to be cared for, appoint a nominated representative. The duties of such nominated representative shall include taking proper care and making decisions relating to the treatment of the medical illness. The Mental Health Act 1987 empowered the district court to appoint a guardian, as well as a manager, to manage the property of a mentally ill person. The court may appoint a guardian when the mentally ill person is unable to take care of him or herself. If such person is also unable to manage his or her property, then the court of wards may do so, failing which, upon seeking proper approval, the collector will be entrusted this responsibility. Should the collector be unable to manage the property, then the district court may appoint any suitable person to do so.
In the recent ruling of Aruna Ramchandra Shanbaug v Union of India the Indian Supreme Court has allowed passive euthanasia (withholding of medical treatment for discontinuance of life). Importantly, the court also made a brief mention of ‘living wills’ although it did not deliberate not its legality.
What rules, restrictions and procedures govern the holding and management of a minor’s assets until the minor reaches the age of capacity?
Personal laws, as well as the Guardianship and Wards Act 1890, govern the provisions relating to ownership of assets on behalf of minors until they attain the age of majority (ie, 18 years).
Marriage and civil partnerships
What matrimonial property regimes are recognised in your jurisdiction?
Since matrimony itself is governed by personal law, customary as well as codified laws provide for the recognition of matrimonial property. The key regimes are outlined below:
- Hindu law: Traditionally, property gifted to a woman at the time of marriage is regarded as her absolute property or streedhan (wealth of a woman).
- Muslim law: A women’s right to mehr from her husband/his family at the time of her marriage or divorce is customary.
- Married Women’s Property Act 1874: Although applicable to women other than Hindus, Jains, Buddhists, Sikhs and Muslims (other than insurance policies), this legislation protects and recognises the absolute ownership of earnings of a married woman as her property prior to and after her marriage. It specially addresses life insurance policies, allowing the woman and her children to benefit from such policies.
- Limited community property rules: A report exists on the need to enact community property rules in India, but the principle is applicable to the state of Goa alone, which is largely influenced by Portuguese law.
Are same-sex marriages and/or civil partnerships recognised in your jurisdiction?
No; Section 377 of the Indian Penal Code 1860 prohibits it. Further, the Supreme Court of India has upheld the constitutional validity of the said provision in the case of Koushal v Naz Foundation (2013).
Is there a legal distinction between legitimate and illegitimate children in terms of estate and succession planning?
The legal distinction between legitimate and illegitimate children is being bridged fast, subject to the religion and rights in question. In the Hindu context, the jurisprudence of the rights of illegitimate children has undergone considerable change. While the term ‘descendants’ or ‘children’ may be defined in the trust deed to include or exclude according benefit to illegitimate children, succession laws provide for rules on the rights of illegitimate children.
As per Hindu statute and case law, illegitimate children born to Hindu parent(s) out of wedlock are regarded as being related to their mother and to one another and can inherit from their parents and each other. However, case law relating to the rights of an illegitimate child to the family/coparcenary property in which the parents are entitled to a share has been inconsistent.
Illegitimate Hindu minors, though, are entitled to maintenance from their father.
Muslim law recognises the doctrine of iqrar or acknowledgement whereby, so long as lawful union or marriage can be proven, an acknowledgement by the father confers legitimacy on the child. The rights of inheritance of the child depends on the sect. For instance, an illegitimate child cannot inherit from his or her father but may inherit from his or her mother.
Christian law does not recognise the right of an illegitimate child to inherit property. However, such child may, by application under the Code for Criminal Procedure 1973, claim maintenance.
Is there a legal distinction between natural and adopted children in terms of estate and succession planning?
In India, Muslim law and Christian law do not recognise the concept of adoption for the purposes of estate and succession. For Hindus, so long as the adoption is valid and undertaken in a legally compliant manner, then there is no legal distinction between a naturally born and an adopted child. Further, unless there is a contract or agreement stating otherwise, the parents may also inherit from their adopted child.