Opinion | The inheritance tax is an idea whose time has come
Such a tax can potentially prevent the concentration of income and wealth in the hands of a few
If recent news reports are any indication, there is a possibility that more than three decades since estate duty was abolished in India, we may see its re-introduction in the upcoming budget, albeit in a slightly different avatar. Policymakers have been intermittently toying with the idea of an inheritance tax in India, imposed on those who inherit assets from a deceased person. The rate of this tax generally depends on the value of the property received by the heir and his relationship to the decedent. An estate tax, in contrast, is based on the net value of the property owned by a deceased person at the time of death. It is collected only if the value exceeds the exemption limit under the law. The estate duty was abolished in 1985 on the rationale that net benefits accruing from the tax were negative, as the government found itself trapped in innumerable litigation, and the yield from the tax was markedly lower than the cost of its administration. Notwithstanding the history, this is an opportune time to introduce its variant, the inheritance tax, on the following considerations.