Sam Pitroda sparks debate on 'inheritance tax' in India: What is it and what are its income tax implications — explained
Indian Overseas Congress chairman Sam Pitroda's recent comments on 'inheritance tax' in India have stirred up a debate. There are differing opinions on whether introducing such a tax could lead to fairer wealth distribution. Conversely, some argue that implementing an inheritance tax in India may not be justified, citing various economic and social factors such as its potential impact on family businesses and concerns about double taxation.
Mumbai-based investment and tax expert Balwant Jain argues that an inheritance tax is not justified in India because it disincentivises hard work and could regress the country.
'It disincentivises people to work hard, and could lead the country backward," said Jain.
He believes that such a tax would discourage individuals from striving for success and could have adverse effects on national progress. In his view, implementing an inheritance tax does not serve the national interest.
Inheritance tax, also known as estate tax, is a tax levied on the total value of money and property of a deceased person before it is distributed to their legal heirs. The tax is typically calculated based on the value of the assets left behind after any exemptions or deductions. The purpose of inheritance tax is often to generate revenue for the government and to redistribute wealth.
In Japan, the inheritance tax rate stands at 55 per cent, making it one of the highest in the world. South Korea follows closely behind with a rate of 50 per cent. France imposes an inheritance tax rate of 45 per cent, while both the United Kingdom and the United States have rates of 40 per cent. These rates reflect the varying approaches countries take to address wealth distribution and taxation. Inheritance tax plays a
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