Should the inheritance tax be reintroduced?
With the increase in HNIs in India and lower administrative costs, one may justify an inheritance tax, but a transparent set of rules and a realistic threshold limit are necessary to avoid hardships for taxpayers
As India strives to enhance its growth trajectory in today’s difficult economic environment, it is faced with rising fiscal debt. For financial year 2012-13, the fiscal debt till September 2012 is already touching 66% of the budget estimate, up from 37.4% at the end of June 2012. Fiscal consolidation (raising government revenues and cutting expenditure) is the need of the hour. But growth in both personal tax and corporate tax collections for the financial year till July 2012 has decelerated. The 2G spectrum auction has not lived up to expectations. However, the government is committed to its expenditure and is finding ways to increase revenue. Recently, finance minister P Chidambaram encouraged the authorities to debate over the inheritance tax while addressing a National Institute for Public Finance and Policy function.
Inheritance tax is a levy paid by a person who inherits money or property, or a tax on the estate (total value of the money and property) of a person who has died. When one dies, the government assesses the worth of the estate of the deceased, which may include cash in the bank, investments and any other property or business owned by the deceased. If the value of the estate exceeds the inheritance threshold set by the government, the deceased (technically, his estate) will pay
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