Estate-tax watch and gift planning

India abolished estate duty in 1985. Inheritances are tax-free at receipt; capital gains on later sale are taxed (cost basis = deceased's original cost). Gifts to relatives are tax-free; gifts to non-relatives above ₹50K aggregated per year are taxed. Cross-generational planning uses gifts within family, HUF structures, and trusts.

Gift planning: father can gift ₹X to adult son (tax-free; son's income from it is taxed in son's hands at potentially lower slab). Same gift to minor son — income clubbed back to father. Gift to spouse: tax-free but income clubbed back. Gift to HUF: not clubbed if from outside HUF; clubbed if from member. Cross-generational example: grandfather gifts ₹50L to grandson (adult). Grandson invests; income taxed at grandson's slab (potentially lower than grandfather's). Over decades, this saves substantial tax. Other tools: education funding via 80E education loan in beneficiary's name; lifestyle costs via HUF distributions.

A nuanced angle: estate duty repeal is politically reversible. Many practitioners plan as if estate duty might return — using trust structures to insulate against potential future estate duty. Also: cross-border families (NRI children, parents in India) have specific issues. Indian-domiciled person's worldwide assets could attract estate duty if reintroduced; foreign-domiciled person's Indian assets could attract duty. Sophisticated estate planning involves dual jurisdictions, currency considerations, and timing of relocations. Most middle-class Indians don't need this complexity; HNW with cross-border exposure do.