'Prime Minister Narendra Modi is panicked & rattled by Congress's revolutionary manifesto', said Rahul Gandhi while speaking at a Social Justice conclave organised by the grand old party in New Delhi. Rahul Gandhi promised the voters that if Congress-led I.N.D.I.A alliance comes to power it will do 'an X-ray of India' (caste census) and income inequality created by Modi ji & will return a small amount of money to 90 percent of the people of the country from the Rs 16 lakh crore given to the 22 people by the Prime Minister.' Just like that Rahul Gandhi hinted at the idea of an Inheritance tax ahead of Lok Sabha Elections 2024. On the other hand, Prime Minister Narendra Modi cautioned Indians saying that under inheritance tax, 55 percent of people's inherited wealth would be seized and distributed to 'others' if Congress comes to power. In one of his major rallies, PM Modi quoted former Indian PM Manmohan Singh saying that Muslim Minorities have the first rights to India's resources. PM Modi outlined the Congress' Inheritance Tax idea and sparked the infamous "Mangalsutra debate". Keeping the accusations and counter-accusations aside, the question arises what is Inheritance Tax, and what Congress is planning to do with it? Below is everything you need to know-
What is Inheritance Tax?
Inheritance Tax is the policy of taxing the assets and properties that individuals inherit from their deceased ancestors. In layman's language, Inheritance tax is a percentage amount of tax that a person must pay for inheriting a property or asset. Depending on the country, the inheritance tax rate can be as high as 55%. The inheritance tax became the topic of discussion after Congress leader Sam Pitroda cited the example of the United States where the government takes 55 percent of the deceased’s wealth as an Inheritance Tax, while the remaining 45 percent is distributed among the legal heirs or children.
After the BJP including Prime Minister Narendra Modi slammed the Congress for taking away a person's hard-earned money, the Congress party distanced itself from Pitroda’s views, stating that they are his own and do not represent those of the party. Sam Pitroda is the chairman of the Indian Overseas Congress. The idea of inheritance tax is advocated to reduce economic inequality.
Is there an inheritance tax in India?
The answer is no. Currently, India does not have to impose any tax on the inheritance of a property or asset to legal heirs, nominees, or beneficiaries. However, tax laws in India do apply to any income gained from inherited assets or property. Economic inequality is indeed a major concern for India. Many foreign countries have introduced inheritance tax so that it could narrow down the economic disparity because the government can add this revenue to its coffers and simply redistribute it to the poorer sections of society in the form of social welfare schemes. It doesn't sound great for the rich, but it could bridge the economic divide a bit. As per the Times Magazine report published on March 27, 2024, the golden era of Indian billionaires has produced soaring income inequality in India. The report further stated that during the highest recorded period of inequality in India, which occurred during British era from the 1930s until India’s independence in 1947, the top 1% held around 20 to 21% of the country’s national income. However, today, the 1% holds 22.6% of the country’s income.
Countries with inheritance tax
Today, several economies have an inheritance tax, ranging at the top level from 55 percent in Japan, 50 percent in South Korea, 45 percent in France, 40 percent in the UK, 34 percent in Spain, 33 percent in Ireland, and 30 percent in Belgium and Germany.
Protest Against Congress' Inheritance Tax
On May 1, 2024, a group of students held a protest outside Congress headquarters in Delhi against the party's alleged idea of wealth and inheritance tax. Students from various institutions were seen staging a peaceful demonstration with placards against Congress's idea of wealth distribution and inheritance tax.