A Family Settlement Agreement is not treated as a transfer or conveyance; rather, it only solidifies and recognises the pre-existing rights of the members. Therefore, there is no tax implication under capital gains when it comes to family settlements.
A legally sound family settlement is binding on all the involved parties. NRIs can hire a legal counsel to draft or review the Family Settlement Agreement to ensure legal compliance and to make sure the terms are not disputed in future.
FSA is a cost-effective and time-saving method of resolving NRI property disputes while maintaining harmonious family relations.
FSA is an oral or a written agreement which parties enter into voluntarily for the distribution of a family properties and assets. A written FSA requires registration. FSA does not attract taxation on capital gains as FSA only recognises already existing rights and does not create any new right or title.
NRIs choose to resolve property disputes with families through family settlements, as these agreements aim to avoid lengthy and adversarial legal battles while maintaining harmonious family relations.
Family Settlement Agreement (FSA) is a legally binding agreement reached among family members to amicably settle family disputes relating to ownership, division, or management of properties or assets.
NRIs can either file a litigation proceeding or enter into a Family Settlement Agreement to get a fair share of the family property.
Disputes with blood relations regarding ancestral property inheritance or distribution are the most prevalent property disputes faced by NRIs.