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inheritance tax: Indian Overseas Congress (Congress) President Sam Pitroda has given a controversial statement in Chicago, America regarding property distribution. He said that inheritance tax is collected in America.
That means if someone has property worth $100 million and he dies, his children get only 45 percent of the property and the government retains the rights over the remaining 55 percent of the property. Let us find out what exactly inheritance tax is.
What is inheritance tax?
In America, inheritance tax is imposed on property. This is called inheritance tax. People who inherit property i.e. heirs have to pay this tax.
What are the rules in America?
By the year 2023, this tax will be imposed only in these six states of America: Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. So whether this tax has to be paid or not depends on which state of America a person lives in or in which state his property is located? Apart from this, the value of the property and the relationship of the heir with the deceased are also examined.
The US government imposes a direct estate tax on large inheritances. But if there is any income from this property, then separate income tax is levied on it also.
How will inheritance tax be determined?
– Inheritance tax is levied only on amounts above a certain limit. This tax is not imposed if the amount of inheritance is less than the prescribed limit.
– Initially the tax is usually less than 10 percent and then increases to between 15 percent and 40 percent.
– Tax exemption and the rate of tax to be charged are determined by the relationship of the heirs of the deceased person.
Inheritance tax is also imposed in these countries
A survey by Tax Federation.org states that apart from America, inheritance tax is imposed in these countries of the world.
| Country | inheritance tax |
| Japan | 55% |
| South Korea | 50% |
| France | 45% |
| UK | 40% |
| America | 40% |
| spain | 34% |
| Ireland | 33% |
| belgium | 30% |
| Germany | 30% |
| chile | 25% |
| greece | 20% |
| Netherlands | 20% |
| finland | 19% |
| denmark | 15% |
| iceland | 10% |
| turkey | 10% |
| poland | 7% |
| Switzerland | 7% |
| Italy | 4% |
Why is inheritance tax imposed?
The main objective of imposing such heavy tax by the government is to generate revenue. So that money can be spent on development works and the country can progress.
Furthermore, there can be redistribution of wealth in the country i.e. all the capital will not remain confined in the hands of a few people.
When was this tax removed from India?
Inheritance tax was abolished in 1985 during Rajiv Gandhi's government. The then Finance Minister V.P. Singh believed that the inheritance tax was failing to bring balance to society and reduce the wealth gap.
