Should the government introduce inheritance tax? What do the people of India think? Step by step info

 Certainly! Let’s delve into the topic of inheritance tax in India step by step:

1. Understanding Inheritance Tax:

   • When someone passes away, there are two types of taxes that may apply: estate tax and inheritance tax.
   • Estate taxes are calculated based on the total value of the deceased person’s possessions as of the date of death.
   • Inheritance taxes, on the other hand, are charged on the individuals who receive the property.

2. India’s Current Situation:

   • India does not levy an inheritance tax. This means that there is no specific tax imposed directly on inherited property.
   • However, it’s essential to note that other taxes may still apply:
     • Income Tax: If you earn income from the inherited asset (e.g., rent, interest), you need to pay income tax on that income.
     • Capital Gains Tax: If you sell an inherited asset (such as property or stocks), capital gains tax may apply.
     • Wealth Tax: Although wealth tax was abolished in 2015, it’s worth mentioning that it used to apply to certain high net worth individuals.

3. Historical Context:

   • India used to have an inheritance tax, known as the estate duty, which was abolished in 1985.
   • The estate duty imposed a peak rate of 85% on the value of the property left by the deceased property owner¹².

4. Global Perspective:

   • Inheritance taxes exist in several countries worldwide. For instance:
     • United States: There’s an inheritance tax where a portion of the wealth is transferred to the government upon death.
     • Objective: The primary objectives of inheritance taxes are to boost government revenue and promote wealth redistribution.
     • Equality of Opportunity: Some argue that inheritance taxes ensure “equality of opportunity” by preventing excessive concentration of wealth.

5. Debate and Discussion:

   • The topic of reintroducing inheritance tax in India has sparked debate.
   • Sam Pitroda, chairman of the Indian Overseas Congress, supported the idea of an inheritance tax, citing the US example.
     • He proposed that leaving a portion of wealth for the public (not all of it) upon death sounds fair.
   • However, opinions on this matter vary, and it’s essential to consider economic implications, social perspectives, and practical implementation.

In summary, while India currently does not have an inheritance tax, the topic remains open for discussion. As with any tax policy, it involves balancing revenue needs, social equity, and economic growth¹³⁴. If you have any further questions or need additional information, feel free to ask!