Reintroducing Inheritance Tax In India: A Path To Wealth Redistribution

Vaaruni Sadananda, Nanjappa MC & Mahitha Chakravarthi, School of Law, CHRIST (Deemed to be University)

1. ABSTRACT

The fact that nearly 40.6% of India’s wealth is held by only 1% of the population in the nation shows the deep and widening inequality in the nation.1 A recent study by Oxfam India showed that, with a population of over 1.4 billion, the bottom 50% of the population holds less than 3% of the nation’s wealth.2 Figures like this clearly point out the unequal concentration of wealth in the nation and calls for a need to adopt better methods of redistribution of wealth. One way of achieving this might be by making necessary changes in the taxation system in our nation, more specifically, through the reintroduction of Inheritance Tax. Historically, India did have an inheritance tax under the Estate Duty Act of 1953, which was later abolished in 1985 due to administrative inefficiencies. The meager income of 2 crore that it generated was not considered significant enough.3 But changing times have once again sparked light on the need to implement it. This paper will analyze the implications and objectives of inheritance tax, followed by an assessment from the constitutional and economic point of view. It will then look into an analysis of nations such as Japan and South Korea where this system is still in place. Lastly, the paper will conclude by analyzing the pros and cons of whether Inheritance Tax must be reintroduced in India.