Chances are high that in the Union Budget 2019, Finance Minister Nirmala Sitharaman may reintroduce 35-year-old inheritance or estate tax in her first budget speech.
Inheritance tax is levied on the wealth inherited by the legal heirs of a deceased person. Also known as estate tax, it is levied by governments of most western countries, (US and the UK). India too had this tax (from 1953), but it was abolished by the Rajiv Gandhi government in 1985.
In India, property/estate duty was implemented as an effort to decrease financial disparity in 1953 under the Estate Duty Act, 1953. Estate duty levels were progressive and on properties exceeding Rs 20 lakh grew to 85 percent
Inheritance tax implies a tax on property, jewelry, stocks, FDs, money in bank, immovable and mobile property transferred to successors (family members) after the real owner's death.
There are two different point of views to look at it -
Furthermore, by levying an extra tax, it only implies that with another tax, the state would cripple the common man's purchasing power.
A solution that is being discussed is to only levy the inheritance tax on the super- rich so that the state rakes in the additional collections and helps its pro poor policy agenda. This would be perfect, many say, because the income gap will also be reduced.
(With inputs from PTI)