Inheritance tax has become the buzz word of the socio-political and economical paradigm of the country, over the past few days. All this, thanks to Sam Pitroda, who sparked the conversation, or rather fierce exchange on the matter, when he indicated that the Congress, if voted to power would introduce a US-like inheritance tax.
The Inheritance Tax Saga
In US, the inheritance tax bracket is not a federal system, but is limited to 6 states.
Although India, does not, and never inheritance tax in that form, but did have Estate Act 1953. This act largely talked about passing on the estate, after the demise of the individual in question.
Now, in another angle, that is being explored in the matter, Akhilesh Mishra, an entrepreneur, who appears to have links to the the BJP, has claimed, that these changes to the law, that is the abolition of The Estate Act 1953 in 1985 came to pass at a suspicious period.
According to Mishra, the law, that existed in the country for three decades, was abolished right before former PM Indira Gandhi's transfer of estate worth over USD 170K or above Rs 20,00,000 (according to exchange rates in 1985, 1 USD = Rs 12.38).
Mishra said, "Inheritance Tax in India was abolished in 1985 by Rajiv Gandhi. The timing though is highly suspect. Total $173,000 of estate was passed on by Indira Gandhi as inheritance, post her death in 1984, to her three grandchildren Rahul Gandhi, Priyanka Gandhi and Varun Gandhi."
He further cast aspersions on the move, saying, "In very first budget of Rajiv Gandhi in 1985, estate duty (inheritance tax) was abolished. For what end? To save inheritance of Rahul Gandhi and Priyanka Gandhi?"
Estate Act Was Abolished in 1985
Indira Gandhi was assassinated in 1984, when her own security guards took her life, allegedly in retaliation to 'Operation Blue Star', that saw the defence forces enter the Golden Temple to drive out extremists from the shrine.
The tax was abolished under then finance minister VP Singh, who later went on to become the prime minister, relinquishing the Congress. The tax was abolished, as it could not bring about the parity, that it hoped to instate. Moreover the very exercise of collection of the said tax became overtly cumbersome.
