India’s own estate tax existed during 1953-85

Aditi Tandon

New Delhi, April 24

India had its own version of inheritance tax by the name of Estate Tax which lived on the statute from 1953 until 1985 when late Prime Minister Rajiv Gandhi abolished it.

When it did exist, the estate tax was imposed on assets transferred to legal heirs (children or grandchildren) after the demise of the asset holder.

Under the Estate Duty Act, 1953, a tax to the extent of 85 per cent of the worth of inherited assets exceeding a value of Rs 20 lakh was mandated to be paid by the executors of the estate of the deceased owner. It was a highly unpopular tax.

After abolition, both the Congress and BJP governments flirted with the idea of inheritance tax. In 2011, senior UPA minister P Chidambaram called for a debate on inheritance tax in the context of worries over a low tax-GDP ratio. In 2012, Chidambaram again flagged the need for a debate on the requirement of inheritance tax in India. Wondering if the country had paid even a little attention to accumulation of wealth in few hands, Chidambaram had said, “I am still hesitant to talk about inter-generational equity and therefore inheritance tax.”

In 2014, BJP’s Jayant Sinha backed the idea of estate tax “so that we take away 50-55 per cent of the advantage that dynastic business people already have right now”.