What is the
Debate on
Inheritance
Tax in India?
~ SIDDHANT MEHTA
Let’s understand the controversial debate of
Lok Sabha Election 2024 in just 30 seconds
Before jumping on the debate let’s first
understand what is Inheritance Tax?
Inheritance tax is a tax
imposed by some
governments on the
value of assets inherited
from a deceased person.
It's essentially a tax on
the privilege of receiving
property or money from
a deceased person.
According to leading financial firm PwC, most European,
American and even African nations levy inheritance tax.
The top nations levying tax on inherited properties are —
Territory Inheritance Tax Rate (%)
France 60%
Japan 55%
Germany 50%
South Korea 50%
United Kingdom 40%
Ecuador 37%
Spain 34%
Does India have an inheritance tax?
In 1953, India’s Parliament had passed the Estate Duty
‘Death Tax’ Act.
And as per the Act, tax/duty was imposed on the principal
value of movable and immovable property, including
agricultural land, passed on to any person after the death
of the owner of such property.
But in 1985, the Finance Minister
V.P. Singh abolished the act as the
income generated for the Centre
via such taxes was much less than
the cost incurred due to the
administrative process in executing
it.
Thereafter the efforts were also taken
to revive inheritance tax
In 2011, during a Planning Commission meeting, the
Home Minister P Chidambaram had put a point on re-
imposing inheritance tax.
Prior to the Union Budget in 2013, Mr. Chidambaram
called for a debate on the need for inheritance tax. He
had questioned the accumulation of wealth by a few
individuals while the majority languished.
Similarly, in 2017, reports suggested that the Finance
Minister Arun Jaitley was planning to levy taxes on inherited
wealth.
But later in 2018, Mr. Jaitley said that inheritance tax
makes wealthy people in Western countries donate more
money to hospitals, schools, etc. He thinks this doesn't
happen much in India. Even though he thinks inheritance
tax might help but he wasn't suggesting bringing it back to
India.
There were occasional discussions about bringing back such
tax in India, but as on now, there is no tax imposed on
property inherited.
Now, coming back to our Debate of Lok
Sabha Election 2024
This debate took a rise on April 24 when Indian Overseas
Congress chairman Sam Pitroda’s remarks advocating for a
US-style tax policy for inherited family wealth.
Responding to this, other political leaders alleged that
Congress would impose such tax on inherited wealth if
voted to power.
Then Congress general secretary Jairam Ramesh denied
this by clarifying that they have no plan on the inheritance
tax. And Sam Pitroda has expressed his views in the
American context, which has no relevance here.
Later, Mr. Pitroda himself clarified on X (formerly known
Twitter)
Inheritance tax is not currently
levied in India. The government
may consider its implementation
in the future, but there are no
concrete plans at this time. So,
Don’t worry.
~ Siddhant Mehta
