Many business families living abroad and persons of Indian origin (PIO) are housing their funds, properties, and other income generating assets here in local trusts to escape the tag of RNOR (resident but not ordinary resident).
At least 10 Indian families from the US, Africa and the UK have set up irrevocable, discretionary trusts in India since the residency law was changed two years ago, said persons who have advised them.
“Most of them are in the autumn of their lives, having spent decades abroad and amassing wealth. But they have deep bonds with India, miss their motherland and want to spend five to six months every year to handhold and guide local entrepreneurs and participate in philanthropy. Some also fear that a change in the RNOR status could be a precursor to a change in disclosure regulations on their overseas assets – something they are not comfortable with. So, a combination of factors is going in the formation of the trusts despite the fact there is absolutely no tax advantage,” said Bijal Ajinkya, partner at the law firm Khaitan & Co.