Determinacy Of A Trust – Indian Tax Insights

Trust structures have gained popularity over the years in India as vehicles for pooling of investments and for estate planning by high net-worth individuals. With respect to investment funds, a tax pass-through mechanism is vital as the investors would prefer that the income is taxed at the investor level as opposed to being taxed in the hands of the trust. A tax pass through for trusts is fairly common in several jurisdictions. The tax code in India too provides for a tax pass-through for certain types of funds such as Category I & II Alternative Investment Funds ("AIFs"), Securitisation Trusts and a partial tax pass through for Real Estate Investment Funds ("REITs") and Infrastructure Investment Trusts ("InvITs").