India Had Inheritance Tax 40 Years Ago: Congress and BJP Have Explored the Idea Since

India Had Inheritance Tax 40 Years Ago: As Congress sought to douse the political firestorm after Sam Pitroda advocated an "US-like inheritance tax" in India, Jairam Ramesh tweeted, "The Congress has no plans whatsoever to introduce an inheritance tax. Rajiv Gandhi abolished estate duty in 1985."

Indians are not unfamiliar with inheritance taxes. Such a tax, called estate duty or "death tax" in some countries, was very popular around four decades ago until it was abolished in 1985.

In the years since then, both the Congress-led UPA government and the NDA have floated the idea of bringing back such a tax.

P Chidambaram, former finance minister, mentioned imposing inheritance taxes on several occasions between 2011 and 2013. During the first term of the NDA government, Jayant Sinha was an avid advocate of the idea as well.

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About the Inheritance Tax During 1953-85

In 1953, the government decided to introduce the inheritance tax under the Estate Duty Act to reduce economic disparity. The government found that there were glaring wealth inequalities so the idea of a tax was conceived.

Furthermore, it was a way to tax the super-rich who passed on huge amounts of wealth.

Estate duty is a tax based on the total value of property held by an individual at the time of his or her death. The tax must be paid when the property is transferred to the heirs.

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In India and abroad, the duty was imposed on all movable and immovable property.

Despite the levy's popularity, estate duty rates were as high as 85 percent on properties valued over Rs 20 lakh, with a rate of 7.5% for properties worth less than Rs 1 lakh.

Property value was calculated based on the market value at the time of death.

Even though the law was intended to increase state revenue and reduce stark economic disparities, it received fierce criticism from the opposition and other sectors throughout its 30-year lifespan.

As a result of its complex valuation rules and high administration costs, the Indian Estate Duty Act was abolished in 1985.

In 1984-85, the total tax collection was Rs 20 crore, but the collection costs were high, so individuals began concealing inherited property and holding benami properties to avoid paying the tax.

Public resentment was sparked by the separate estate tax on top of an income tax.

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