Pitroda is demanding a 50 per cent inheritance tax. This means half of anything a person builds will be charged as a tax after their death, and their inheritors will only be able to acquire the remaining 50 per cent.
A political row has erupted around wealth redistribution after Sam Pitroda, chairman of the Indian Overseas Congress, urged for an inheritance tax system in India, a system like an existing tax system in the U.S.
Pitroda is demanding a 50 per cent inheritance tax. This means half of whatever a person establishes or creates will be charged as a tax after their death, and their inheritors will only be able to acquire the remaining 50 per cent.
Inheritance Tax in the U.S.
In the United States, an existing inheritance tax is a state tax levied on money or property you inherit from a deceased person's estate. The inheritance tax, as contrary to the federal estate tax, is fulfilled by the beneficiary.
In 2021, only six states in the US implemented an inheritance tax: Lowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The tax rates and exemptions differ by state, with some states excluding some classes of heirs or implementing lower tax rates on transfers to close family members.
Inheritance tax rates can vary from less than 1% to 20% of the inherited property and cash worth. However, the tax is calculated on the amount of a property or money which is over a certain threshold.
While speaking to ANI, Pitroda said, "In America, there is an inheritance tax. If one has $100 million worth of wealth when he dies, he can only transfer probably 45 per cent to his children and the remaining 55 per cent is grabbed by the government. That's an interesting law.”
Inheritance Tax in India
About 40 years ago, a similar taxation system was present in India, but was later nullified by the then Prime Minister Rajiv Gandhi in 1985, in a bid to simplify the tax system and boost investment and savings.
Also called estate duty, the tax was implemented in India in 1953. The tax was levied on transferring assets from a dead person to their heirs. The tax was levied on the total value of the estate of the deceased person, and the inheritors were required to pay some percentage of this amount as tax to the government.
Later, there has been rising demand to reintroduce the tax, particularly due to growing income inequality and the concentration of wealth among rich. However, no relevant step has been introduced for this.
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