Inheritance Tax as a tool of Wealth Redistribution | Current Affairs | Vision IAS
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    Inheritance Tax as a tool of Wealth Redistribution

    Posted 26 Apr 2024

    2 min read

    • The use of inheritance tax to address economic inequality is widely debated in India. 
    • Inheritance tax is levied on property inherited upon an individual's death. 
      • It differs from estate tax, which is levied on the total value of a deceased person's estate.
      • It is levied by many countries. E.g.  Japan (tax rate is 55%), South Korea (tax rate is 50%) etc. 
    • In India, currently there is no inheritance tax. 
      • Earlier, estate duty was imposed in 1953.
        • The tax rate reached up to 85%, making it highly unpopular. Thus, it was abolished in 1985.
      • Similar to Estate duty, gift tax and wealth tax were imposed in India.
      •  These were abolished in 1998 and 2015 respectively. However, gift tax was introduced in 2004. 

     

    • Pros and cons of Inheritance Tax 

    Specifications

    Pros

    Cons

    Revenue Generation
    • It may lead to an increase in revenue generation for the government. 
    • Due to the high taxation rate, loopholes such as tax evasion and avoidance can be used.
    • Also, it may lead to distress sales for depositing taxes.
    Wealth Distribution
    • It may reduce wealth inequality. It will promote equality  of opportunity. 
    • It will discourage individuals from working hard. 
    • It may amount to double taxation as assets inherited might have been already taxed.
    • Tags :
    • Inheritance Tax
    • Redistribution of Wealth

    Articles Sources

    https://indianexpress.com/article/explained/explained-politics/sam-pitroda-controversy-how-inheritan
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