India had inheritance tax 40 years ago what was it like why did it go – News18 Kannada Achi-News

Indian Overseas Congress President Sam Pitroda’s statements regarding inheritance tax have created a stir in politics. Speaking in Chicago, America, he said that there is an inheritance tax in the United States of America. An individual’s wealth is taxed at 55%. The Congress camp is currently in a quandary with the statement that an individual’s children can only pass on 45 percent of a share to the family. BJP leaders along with Prime Minister Modi expressed anger over Sam Pitroda’s statement.

India also had an ‘inheritance’ tax 40 years ago just like America had an inheritance tax. But in time, this tax system was abolished. Let’s see why this tax was uprooted in India.

What is Inheritance Tax?

This tax idea is very simple. If someone owns property and dies, they can only give 45% of the property to their children. The remaining 55% of the property will be taken by the government. Then distribute to the poor. This is a form of redistribution of wealth.

Inheritance Tax in India

India currently does not have an inheritance tax, although this tax system is in place in many developed countries. This tax system was abolished in India in 1985.

Previously under the Estate Duty Act 1953 until June 16, 1985 the executors of the deceased’s estate had to pay a higher “estate duty” of up to 85% of the value of the inherited property.

History of Inheritance Tax

In 1953, the Estate Duty Act was enacted in India to address economic inequality by introducing an estate tax.

The tax was designed to be progressive, with estates worth more than Rs 20 lakh being taxed at 85 percent. It applies to immovable and movable property inherited by heirs after a person’s death regardless of their location.

Property that passes two years before death is not taxed, but any disposal within two years of death may be subject to estate duty. The legislation was very complex with different valuation rules for different types of property. Estate duty was to be paid on a slab basis.

Despite the intended goals of this tax system, the estate duty law faced many criticisms during its existence.

Inheritance tax has led to more litigation

This single tax system led to increased litigation and administrative costs. There were also concerns about double taxation as property was subject to estate duty and wealth tax (later abolished from FY 2016). Moreover, estate tax collection fell short of expectations due to issues such as illegal concealment of assets and government ownership of benami properties.

As a result of all this, the system was abolished after March 16, 1985. The proposal to reintroduce inheritance tax in India is likely to face widespread opposition. It is for this reason that Sam Pitroda’s statement has been the subject of controversy and controversy.

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