Inheritance Tax

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Inheritance tax, also known as estate tax or death duty, is a tax levied on the transfer of assets from a deceased person to their heirs. The primary objective of inheritance tax is to address income inequality by redistributing wealth.

Historical Context in India:

India previously had an inheritance tax, which was called estate duty. Estate duty was established in 1953 during the leadership of PM Jawaharlal Nehru. It was applicable to the estates of individuals who deceased, with rates varying depending on the estate's value. However, in 1985, the administration of PM Rajiv Gandhi eliminated estate tax.

Wealth Tax:

Wealth tax was imposed on the total wealth of individuals, encompassing assets like real estate, jewels, and monetary investments. In 2015, the Indian government opted to eliminate it due to administrative difficulties and low revenue generation.

Gift Tax:

Gift tax applied to the transfer of assets during an individual’s lifetime. However, in 1998, the government abolished gift tax, citing similar reasons as for wealth tax.

Current Scenario:

Currently, there is no specific inheritance tax in India. Demands for reintroducing inheritance tax have emerged intermittently, particularly during electoral cycles. Nevertheless, no definitive actions have been taken to reintroduce it.

Global Trends:

Some nations have suggested measures such as a worldwide minimum corporate tax rate and increasing levies on the ultra-wealthy. For example, the Biden Administration in the United States has proposed a Billionaire Minimum Income Tax of at least 25% on their entire income, comprising unrealized profits.

Source: IE