Economist Gautam Sen has said the idea of inheritance tax is not realistic and also described as impractical Congress leader Rahul Gandhi’s proposal of a "wealth survey".
In an interview to news agency ANI on May 8, the political economist said surveying all households and business for wealth redistribution was impractical and would lead to economic chaos.
Gandhi’s talk of “wealth redistribution” and his party’s poll promise of a socio-economic census touched off a political firestorm, with the BJP accusing the Congress of planning to snatch people’s hard-earned wealth.
Sen said around 2.4 percent people pay taxes in India and out of them nor more than 1.2 million have personal assets. “In order for them to be forced to surrender, you have to close their businesses down. That means the following year, there will be economic chaos,” Sen said.
Also read: What is inheritance tax and why Sam Pitroda's views stirred the political pot
The country has seen vast improvement in the past few years compared to earlier period. “Whoever thought of this idea was not thinking very realistically, what we have now is a very vast improvement on what we used to have before — we have this incredible combination which has almost never been achieved, of combining wealth creation through investment, infrastructure with redistribution,” he said.
Reacting to Congress leader Sam Pitroda's suggestion of a US-like “inheritance tax” in India, the economist said there is no such tax in the US.
Also read: Inheritance tax row: What BJP said, how opposition reacted
“First of all, there is no inheritance tax in the US. They don't have inheritance tax, it is called estate duty and gift tax. In the US, it is paid by 0.14 percent of the deceased till 2022 - of 2.5 million deceased only 0.14 percent, ie 4,000 people in the entire US are subject to Estate Duty,” Sen said.
Most estates are exempt from paying taxes because the exemption limit is “very high” at $13.6 million, he added.
Also read: 'Have not said...': Rahul Gandhi's clarification amid wealth redistribution row
What Pitroda said?
The issue of redistribution and inheritance had erupted after Indian Overseas Congress president Pitroda said India should explore the inheritance law and cited the example of the US, saying “55 percent of the wealth of rich goes to the government after death”
Pitroda also said the subject of wealth distribution was a "policy issue", while underscoring the need for a minimum wage in India.
Congress' stand
The Congress distanced itself from Pitroda’s remarks.
President Mallikarjun Kharge said the Congress had no plans of bring an inheritance tax. "There is a Constitution, we don't have any intention of doing this. Why are you putting BJP's words in our mouths? They are just saying all this for votes," Kharge said in response to media queries.
Also read: What did Rahul Gandhi, Congress manifesto really say on wealth redistribution?
Congress General Secretary (Communications), Jairam Ramesh said Pitroda's view didn’t not reflect the stand of the party. "The Congress has no plan whatsoever to introduce an inheritance tax. In fact, Rajiv Gandhi abolished estate duty in 1985," Ramesh posted on the X platform.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
