Investing in art? Make sure your papers are in order to avoid tax problems

The paperwork must show how the artwork was procured and that valuation was correct when it was bought; art collectors also need to insulate their beneficiaries from tax troubles in the future

The Indian visual art industry is nascent compared to developed markets such as the US, the UK and China, even as high net-worth individuals (HNIs) are increasingly looking at including works of art in their investment portfolios. The huge interest shown by India’s wealthy population has prompted London-based auction house Sotheby's to host its inaugural sale in Mumbai this December. This is the first time the auction house will be hosting a sale in the country after its first attempt three decades ago.

A few HNIs are also using artwork for portfolio diversification. Some wealthy individuals buy their