Estate Tax or Inheritance Tax is a matter of question in the country for a long. Also, the ruling government is looking forward to implementing the same christened Inheritance Tax. There are assumptions that the BJP party is in favour of bringing such tax reform in the country. Several reports from last year suggest that the government was asking for Indians’ advice and their reaction to the Inheritance Tax. However, ordinary people would not be affected by this tax.
What is Inheritance Tax?
Back in time, Inheritance Tax was known as Estate Duty. Estate Duty was levied on the property transferred to the child from the parents. It is estimated that the Inheritance Tax could be in the range of 5-10 per cent. Earlier than this, the Estate Duty was collected in the country from 1953 to 1986 which was later ended via the Rajiv Gandhi government. There are words about the Inheritance Tax that if the tax hit the country the family trust would not be liable for levy tax. Owing to this, High Networth Individuals (HNI) have started making a family trust in order to save their property.
What is Estate Duty?
In India, for the very first time in 1935, Sampada Shulk or Estate Duty from England was implied. Here in this tax, if the family’s leader dies the inherent have to pay the levy on the transferred main property. The main property is the wealth of the dead person that can be sold in the market while the person is alive. The Estate Duty remained in provision since 1986 and Rajiv Gandhi’s government ended this tax in the country. The former finance minister Mr Arun Jaitley during his addressing put this Inheritance Tax in an all-new form. Also, he suggested these kinds of taxes in Western countries contribute a lot to hospitals and educational institutions.
How Can You Calculate Inheritance Tax?
The tax computed is based on the value of the assets minus any exemptions or deductions. Generating revenue for the government and easing wealth redistribution is the core purpose.
Inheritance Tax Rate in the World
Individuals are needed to file the inheritance Tax with rates varying from 40% to 55% in certain countries that have obtained the value or property from a deceased family member.
| Country | Tax Rates |
|---|---|
| United States | 40% |
| France | 45% |
| United Kingdom | 40% |
| South Korea | 50% |
| Japan | 55% |
I-T Rate of Inheritance in India
In 1985 India eliminated the inheritance Tax.
In What Way Is Inheritance Tax Gaining Traction in India Even After Absence in Existing Tax Framework?
The Indian Overseas Congress Chief emphasized the significance of wealth redistribution policies, through the use of an example of the inheritance tax in the US.
Let’s check what he expressed-
The importance of wealth redistribution policies is been emphasized by Congress Chief through the instance of the inheritance tax in the US.
He learned that in the US if somebody has $100 million in wealth and passes away, they can only transfer about 45 per cent to their children; the government takes the remaining 55 per cent which signifies a portion of an individual’s wealth (about 55%) is levied to tax upon their death.
It is an exciting law, Congress Chief recommended, you in your generation made wealth, you are leaving now, and you should leave your wealth for the public not all of it though half of it which sounds good to him.
No such tax is there in India. The requirement to discuss these problems to build policies is there that provide an advantage to everyone, Congress Chief highlights.
He stated that his remarks were personal and factual, not describing any official perspective.
Indian Expert Views Over Inheritance Tax
Inheritance tax must be wholly assisted by the digital and technological database as it will help in maintaining the correct figures on the online platform with secured management.
The inheritance tax must be applied on a particular monetary limit which will further save some amount for the family to take benefits of the inherited property.
Inherited property is a personal wealth accumulation and must not be taken into consideration for taxes as the population is currently given taxes on all the goods and services available in the country.
The inheritance tax must be routed towards other investment portfolios and must be left from the taxation segment. The amount must be invested in certain categories as per the guidance of the Indian government.
Top FAQs About Inheritance Tax in India
Q.1 – What are the ways of inheritance taxed in India?
No inheritance tax in India is there. Assets passed on to the legal heirs are gifts and received without any consideration.
Q.2 – Is inherited life insurance levied to tax?
Any proceeds from a life insurance policy as of the sudden death of a policyholder are waived from tax. Hence beneath these cases, the nominee could avail the needed sum assured amount.
Q.3 – Is there any chance NRIs inherit property in India?
Yes, NRIs can inherit property in India. But, no taxes on inheritance are there.
Q.4 – Is inheritance free from tax in India?
No inheritance tax is there in India till now. Hence if you inherit any property or assets then you do not need to file any taxes and can prevent them.
Q.5 – Is there a chance to prevent the inheritance tax in India?
From a deceased individual inheriting any property shall make you file no taxes. As inheritance taxes are waived from India till now you could prevent the same. However, you are required to file the taxes on the generated income via inherited assets.
Q.6 – Is there any capital gains tax on inherited shares?
On inherited assets, Capital gains tax gets charged when an individual who inherited the assets wishes to sell them.