Inheritance Tax Row: A Brief History Of ‘Death Tax’ In India

Amid the Lok Sabha elections, a political slugfest has been raging between the ruling Bharatiya Janata Party (BJP) and the opposition Indian National Congress (INC) over inheritance tax, with claims and counterclaims after overseas Congress chairman Sam Pitroda supported the idea of “death tax” as in the US in a television programme this week. Pitroda’s comments were in response to Prime Minister Narendra Modi’s controversial remarks at a Rajasthan election rally ahead of the second phase polls, where he claimed that Congress would redistribute people’s wealth, including gold, land and cash to those with a “large number of children and among the intruders”, referring to the Muslim community.

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The Controversy

The inheritance tax issue has become a political hot button after the PM unleashed a salvo attacking the Congress manifesto, which promises “suitable changes in policies” to address the growing inequality of wealth and income and Rahul Gandhi’s assurances for economic, institutional, and caste surveys before the “redistribution” of wealth. Following Modi’s statement, Pitroda backed the idea of an inheritance tax, saying: “Nothing wrong in accumulating wealth. In America, there’s an inheritance tax. Probably 45 per cent of a US citizen’s wealth can be transferred to his children, while the government grabs 55 per cent. Now that’s an interesting law,”the Times of India quoted him as saying. However, the BJP took no time to exploit the maximum political mileage from it and take the fight to Congress’s doorstep. The party’s uneasiness is evident, coming at a time when polls are underway. Congress general secretary Jairam Ramesh clarified: “Congress has no plan on the inheritance tax. (Sam) Pitroda is a distinguished professional and has expressed his views in the American context, which has no relevance to us. He does not speak on behalf of the Congress.” Pitroda also clarified that he only cited an example. “I mentioned US inheritance tax in the US only as an example in my normal conversation on TV. Can I not mention facts? I said these are the kind of issues people will have to discuss and debate. This has nothing to do with policy of any party, including Congress,” Pitroda commented on X. Also Read: Lessons From Sania Mirza’s Retirement: 3 Things To Learn For Retirement However, what’s interesting is that the then PM Rajiv Gandhi had abolished the tax in 1985. Currently, there is no inheritance tax, whether through a will or intestate succession.

Inheritance Tax Background In India

The Indian parliament passed the Estate Duty Act in 1953 to impose taxes on movable or immovable property after the owner’s death, provided the person is an adult. According to a Hindu report, the duty was applied to properties based on their market value and subject to the exclusion limit set by the Act. The government, it said, amended the Act several times, and the duty increased simultaneously, making the law highly unpopular. The consequent public resentment forced the then government in 1985 to scrap the law. However, in 2004, the government reintroduced a gift tax scrapped in 1998 to tax gifts above Rs 50,000 on movable or immovable assets, barring donations, inheritance, and gifts during weddings. Countries that impose inheritance tax include France, Germany, the UK, the US, Spain, Hungary, Japan, South Korea, and South Africa, among others.