How to Set Up a Family Office in India

Setting up a family office in India means choosing the right structure, building a professional team, and meeting the scale to manage wealth, tax, and legacy effectively.

Family offices in India have emerged as sophisticated structures for ultra-high-net-worth individuals and families.

The country is growing in wealth creation, especially among first-generation entrepreneurs.

Hence, the need for professional structures to manage wealth, investments, and succession planning has become increasingly important.

Since 2018, the number of family offices have jumped from about 45 to roughly 300 today, managing an estimated $30 billion in assets under management (AUM).

As the Indian wealth ecosystem matures, family offices are poised for further growth.

Especially in Tier II/III cities, while driving professionalization, preservation, and intergenerational transition of wealth.

In this guide, we’ll discuss:

• What is the concept of a family office in India?
• What are the tax benefits of a family office in India?
• Setting up a family office in India

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What is the Purpose of a Family Office in India?

• Wealth Protection and Management

The primary purpose is to protect and grow the family’s wealth through professional management of diverse assets, including (but not limited to):

• Business holdings
• Investments in public markets
• Immobili
• Alternative investments

• Professional Control and Consolidated Management

Family offices provide single-point professional control of all businesses and assets.

This becomes vital where there are multiple decision-makers in a family, potentially across different jurisdictions.

• Succession Planning and Wealth Transition

They play a crucial role in facilitating smooth intergenerational wealth transfer.

Hence, helping establish clear succession plans that respect both family traditions and modern realities.

• Privacy and Information Management

Family offices ensure that sensitive financial information remains protected while allowing for selective sharing on a need-to-know basis.

• Governance Frameworks

They implement governance structures that prevent conflicts and ensure strategic decision-making that aligns with the family’s values and long-term objectives.

• Diversification and Global Investments

As Indian HNWIs increasingly seek international diversification, family offices facilitate access to global investment opportunities.

That too, while navigating the complexities of cross-border investments.

• Philanthropy Management

Many family offices in India now include dedicated philanthropy divisions that align charitable giving with the family’s values and maximize social impact.

How Many Family Offices Are There In India?

Il family office sector in India has experienced exponential growth over the past decade:

• The number of family offices has increased from just 45 in 2018 to nearly 300 in 2024, representing almost a sevenfold increase in just six years.
• Looking back further, industry experts note that a decade ago, India had only about 30 large family offices.
• These family offices collectively manage approximately $30 billion in assets under management (AUM).
• The average family office in India manages approximately $100 million in assets, though this figure varies significantly based on the family’s wealth.
• AUM expected to grow at a 14% CAGR over the next three years, potentially multiplying by 1.5 times.
• Some experts predict that the number of family offices in India could grow to as many as 3,000 in the coming years.
• The expansion is particularly noticeable in Tier 2 and Tier 3 cities as wealth creation becomes more geographically diverse.

Notable family offices in India include:

• Catamaran Ventures (owned by Infosys co-founder Narayana Murthy)
• Premji Invest (overseen by Azim Premji)
• Subhkam Ventures
• Natarajan Sekhsaria Family Office
• Nadathur Holdings

This growth is primarily driven by India’s expanding base of ultra-wealthy individuals.

Many of these are first-generation wealth creators seeking structured solutions for gestione patrimoniale.

What Are The Tax Benefits Of Family Offices In India?

• Corporate Structure Benefits:

Regular Regime: 30% corporate tax (plus surcharge and cess) for large domestic companies.

Concessional Regimes: Under Section 115BAA, 22% + surcharge/cess; Section 115BAB offers 15% + surcharge/cess for new manufacturing firms.

• Pass-Through Taxation:

In some cases, family offices operate through trust structures, particularly those registered as Infrastructure Investment Trusts (InvITs) or Real Estate Investment Trusts (REITs).

In this way, they can benefit from pass-through taxation under Sections 115UA and 115UB of the Income Tax Act. 

This means:

• The trust itself is not taxed on the income it distributes
• Taxation occurs only at the unit holder level
• Different types of income (interest, rental, capital gains) are taxed according to their specific nature

• Structured Tax Planning:

A professional family office can implement sophisticated tax planning strategies, which:

• Optimize the timing of income recognition
• Structure investments for tax efficiency
• Plan for charitable giving in a tax-efficient manner

• Wealth Transfer Optimization:

Family offices help structure wealth transfers in a manner that minimizes tax implications through properly structured trusts and holding companies.

• FIF (Family Investment Fund) Benefits:

For larger family offices, setting up a FIF can provide benefits such as:

• 100% tax exemption for 10 consecutive years
• GST exemption
• Ability to borrow funds and engage in leveraging activities
• Relaxed FEMA rules for investments

How To Create A Family Office In India

Setting up a family office in India involves several strategic decisions and procedural steps:

Choose the Right Type of Family Office

Determine which family office model best suits your needs:

Single-Family Office (SFO): A private organization exclusively managing the wealth and affairs of a single family. This offers maximum customization and privacy but requires significant investment.

Multi-Family Office (MFO): Manages the affairs of multiple families, offering economies of scale and broader expertise. This is often more cost-effective for families with moderate wealth.

Virtual Family Office (VFO): Operates primarily online rather than from a physical location, offering a lean and efficient structure.

Legal Structure and Registration

In India, family offices can be structured as:

1. Private Limited Company:

This is the most common structure, offering limited liability protection and clear governance frameworks. Registration is required under the Companies Act, 2013.

2. Limited Liability Partnership (LLP):

Provides flexibility of a partnership with limited liability protection. Registration is done under the LLP Act, 2008.

3. Trust Structure

Often used for estate planning aspects of the family office. Trusts must register under the Indian Trusts Act, 1882.

Regulatory Compliance

1. SEBI Regulations:

If the family office engages in investment advisory or portfolio management, it may need to comply with Securities and Exchange Board of India (SEBI) regulations.

2. RBI Guidelines:

For foreign investments, family offices must adhere to Reserve Bank of India (RBI) guidelines under the Foreign Exchange Management Act (FEMA).

3. Anti-Money Laundering Compliance:

Family offices must establish procedures to comply with the Prevention of Money Laundering Act, 2002.

Building the Team

A successful family office requires:

1. Core Leadership:

Typically includes a CEO or Family Office Head, Chief Investment Officer, and potentially family members in governance roles.

2. Investment Professionals:

Depending on the size, three or more investment professionals are typically needed to manage diverse asset classes.

3. Support Specialists:

Including legal, tax, accounting, and administrative professionals.

4. External Advisors Network:

Specialists for areas like real estate, art, philanthropy, and international investments.

Establishing Governance Systems

Strong governance is critical for long-term success:

1. Family Constitution:

Document outlining the family’s values, vision, and guidelines for wealth management.

2. Investment Policy Statement:

Formal document detailing investment objectives, risk tolerance, asset allocation, and performance measurement criteria.

3. Decision-Making Protocols:

Clear frameworks for how investment and other financial decisions will be made.

4. Reporting Systems:

Transparent mechanisms for reporting performance and activities to family stakeholders.

Capital Requirements and Costs

• Minimum Capital Requirements:

To start a family office in India there are no clear requirements, however, experts suggest a minimum net worth of Rs. 250 crores is necessary.

Around Rs. 100 crores is the least expected amount that might suffice for a multi-family office with a smaller portfolio.

However, Rs. 1,000 crores or more might be required for an SFO with a significant portfolio.

The actual requirements might vary based on:

• Type of family office
• Assets Under Management
• Complexity of needs
• Services offered

• Costs:

The costs of setting up and maintaining a family office in India can be quite expensive, which might be around Rs. 8 crores.

In general, the cost is a percentage of the assets under management (AUM), which range between 1% and 2%.

These costs vary depending on factors like:

• AUM
• Type of family office
• Complexity of needs
• Servizi
• Location
• Technological integration
• Investment management fees
• Legal and tax advisory services
• Other incidental costs

A noteworthy fact is that some family offices can get these costs under Rs. 3 crores, with incidental costs twice the amount.

Whereas, some manage to operate for a percentage of 0.25% of the AUM.

Multi-family offices usually opt for tiered fee structures, where the percentage is inversely proportional to the increase in the AUM.

Conclusione

Family offices in India have evolved from being exclusive vehicles for a handful of business families to becoming sophisticated wealth management structures for UHNWIs.

Their numbers increased and are poised to play an increasingly important role in the country’s wealth management landscape.

The growth reflects the maturing of India’s wealth ecosystem and the increasing complexity of managing multi-generational wealth.

As more first-generation entrepreneurs create substantial wealth, the need for professional structures to protect, grow, and transition this wealth becomes imperative.

Setting up a family office in India requires careful consideration of various factors.

The process involves significant investment in terms of time, resources, and capital.

However, the benefits—including professional wealth management, tax efficiency, succession planning, and privacy—make it a worthwhile endeavor for India’s wealthy families.

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Adam è un autore riconosciuto a livello internazionale in materia finanziaria con oltre 830 milioni di visualizzazioni di risposte su Quora, un libro molto venduto su Amazon e un contributo su Forbes.