CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Short answerA private family trust is used for succession and asset protection. A specific trust (where beneficiaries and shares are fixed) is generally taxed as if the beneficiaries received the income; a discretionary trust can be taxed at the maximum marginal rate. Structuring it correctly is key to the tax outcome.
Specific vs discretionary
Specific = fixed shares, taxed in beneficiaries’ hands; discretionary = trustee’s discretion, often MMR.
Tax depends on structure
How you draft it drives the tax, so plan it carefully. Confirm treatment for your facts.