In India, inheritance tax was up to 85%, hence Rajiv Gandhi government abolished it. - Newztezz Online

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Wednesday, April 24, 2024

In India, inheritance tax was up to 85%, hence Rajiv Gandhi government abolished it.


Ever since Indian Overseas Congress President Pitroda has given a statement regarding inheritance tax, there has been an uproar regarding the tax. He has advocated indirect inheritance tax to be imposed in America.

Ever since Indian Overseas Congress President Pitroda has given a statement regarding inheritance tax, there has been an uproar regarding the tax. He has advocated indirect inheritance tax to be imposed in America. Whether it will be implemented again in India like America in the future or not is a different matter, but when we turn the page of history, we come to know that earlier inheritance tax was also collected in India. There is a very interesting story behind its removal. First let us know what is inheritance tax?

Earlier inheritance tax was collected in India also

In the pages of history, inheritance tax is mentioned in Rajiv Gandhi's government. In fact, such an incident happened that the then Finance Minister VP Singh abolished it. Then it was said that the government was entangled in a lot of lawsuits due to inheritance tax, the second argument given by the government was that the purpose for which this tax was implemented. It could not be completed. The government said that the income earned from that tax was less than the expenses incurred in its administration. Therefore there was no point in that tax. This was the reason why it was removed in 1985. At that time, 85% tax was collected as inheritance tax.

What do experts say

Balwant Jain, one of the biggest tax experts of the country, while talking to said that there should not be inheritance tax. Therefore, it was removed in India, because the purpose for which it was brought could not be fulfilled. Rajiv Gandhi government had to end it because the expenditure was high and the collection was low. Jain says that that is why China also abolished this tax. Jain says that in a country like India, there was socialism before 1991, tax evasion is high. If we talk about Indira Gandhi government, at that time the general public had to pay tax of only Rs 97 on the income of Rs 100. Taxes play a major role in the progress of any country. Rajiv Gandhi's government had to abolish inheritance tax also because the government itself got entangled in many types of lawsuits regarding it. The tax income was much less than the cost of its administration.

What is inheritance tax?

There is an inheritance tax in America. If someone has property worth $100 million and when he dies, only 45% is given to his children while 55% is kept by the government. Inheritance tax is a tax on property, in which if someone inherits money or a house from a deceased person, then the person who inherits the property pays the tax. Tax rates vary depending on the inherited property and the heir's relationship with the deceased.

As a rule, inheritance tax is imposed in only six states in America and Iowa has asked to reduce the tax rate to 5%. The report says that it has been announced to end it in 2025. Tax rates vary by state, but range from less than 1% to as high as 20% and typically apply to amounts above the exemption limit. Tax rates depend on the size of your inheritance, state tax laws and your relationship with the deceased.

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