Archive · 24 Jun 2025
Tax Implications for Indian Beneficiaries of US Trusts
A father in Dubai wants to set up a US trust for his sons, one in the US and one in India, using a US property.
Because the father is a non-resident, setting up the trust won't cause him any taxes in India.
The son living in India will have to pay taxes on his portion of the rental income from the property.
The other son, living in the US, won't owe any taxes in India.
The Indian resident son will need to report the trust details on his tax forms.
An Indian citizen living in Dubai plans to set up a US trust for his sons, one with a green card and the other an Indian resident.
The father, as a non-resident, transferring foreign assets into a foreign trust will not trigger tax liability in India.
The Indian resident son will be taxed in India on his share of the rental income from the US property, either in the hands of the trustee or directly.
The non-resident son will not be liable to tax on his share of foreign rental income in India.
The Indian resident son must disclose details of the foreign trust in his Indian income tax return.
- Who
- An Indian citizen in Dubai, setting up a US trust for his sons, one a US resident and one an Indian resident.
- What
- Tax implications for an Indian beneficiary of a foreign trust.
- When
- Not explicitly stated.
- Where
- India, US, Dubai.
- Why
- To manage and pass on property while considering tax implications.
Tax Liability
Non-Tax Liability
Rental Income Taxation
Tax Liability
Income from US Property held in trust for Indian Resident Son is taxable in India
Non-Tax Liability
Income from US Property held in trust for Non-Resident son is not Taxable in India
- Trust Location
- US
- Trust Beneficiaries
- Two sons; One US resident, one Indian resident
- Father's Residency
- Non-resident of India (lives in Dubai)
- Property Location
- US
- Indian Resident Son's Tax Liability
- Taxable on rental income share
- Non-Resident Son's Tax Liability
- Not liable for tax in India on rental income share.