Govt may bring back inheritance or estate tax in range of 5-10 per cent

Mumbai: India's tax authorities are considering to bring back inheritance or estate tax that was scrapped in 1986, as the number of High Net worth Individuals has seen a sharp jump in country over past many years.

A report in The Economic Times citing two unidentified persons familiar with the development claims government has sought feedback and suggestions on the proposed reintroduction of inheritance tax.

It is expected the proposed estate tax rate, if implemented, could be levied in the range of 5 to 10 per cent and will be applicable to families, individuals with a net worth of a certain amount, one of the two persons said.

The proposed tax as predicted by taxation lawyers and experts could be introduced in the next budget, the ET report said. In anticipation, a number of HNIs are gearing themselves up against the impending move and making family trusts.

ET quoted Praveen Bhambani, partner at PwC India, as saying: “In recent times, there has been a buzz in HNI circles that to boost revenue, the government may reintroduce estate tax (inheritance tax) and therefore trust structures have been actively considered and deployed.”

As of July 31, 2017, India had as many as 617 individuals with or more than Rs 1,000 crore or $154 million worth personal assets or wealth, a report prepared by Hurun Research Institute had said. Hurun is a luxury publishing group based in Shanghai. Currently, there is no tax in India on bequeathed assets.