Does a non-resident trustee make a trust non-resident?

A trust can remain a tax resident in India even if it appoints a non-resident as its trustee. The key factor is where the trust's control and management are exercised. If the majority of these functions are carried out from within India, the trust is considered resident. The status of the trustee, whether resident or non-resident, does not automatically change the trust's tax domicile.

This distinction is important for investors and families managing wealth through trusts. It ensures that assets held in such structures are taxed in India as per the local laws, provided the management is based here. It prevents the avoidance of tax by simply appointing a foreigner to a position of authority.

Investors should review the specific terms of their trust deeds. They must ensure that the day-to-day management and decision-making authority are clearly defined and exercised from India. This will help maintain the trust's resident status and ensure compliance with Indian tax regulations.