A major controversy erupted between the ruling Bharatiya Janata Party and Congress over the introduction of the inheritance tax. The ruling party has alleged that Congress would bring the tax on inherited wealth if it is voted to power. The grand old party, on the other hand, rejected the claim and said that even their senior leaders once supported the idea.
Following this, remarks by Congress leader Sam Pitroda reignited discussions on inheritance tax. Pitroda gave the example of the inheritance tax model in the US, intensifying speculation and concerns surrounding Congress's economic strategies, despite their efforts to clarify their position.
Countering BJP's claims, Congress pointed out that BJP leaders Amit Malviya and Jayant Sinha once favoured the idea of inheritance tax, which has now become a poll plot for the ruling party.
Congress leader Pawan Khera shared some screenshots of BJP IT cell chief Amit Malviya's old posts on X (formerly Twitter). In the posts, Malviya can be seen supporting the “idea of taxing inheritance wealth” proposed by BJP's then minister of state for finance, Jayant Sinha.
“Meanwhile Amit Malviya regretting why he didn’t delete his past tweets,” Khera wrote on X on Wednesday.
On Wednesday, PM Narendra Modi attacked at Congress over Pitroda for his '50% inheritance tax' remark. Borrowing the LIC tagline, PM Modi said: "An advisor to the royal family has said that the middle class should pay more tax. Now, the Congress wants to impose an inheritance tax. This means that the Congress's loot would continue 'zindagi ke saath bhi, zindagi ke baad bhi [with you in life, with you in the afterlife]."
Congress' general secretary for communications Jairam Ramesh, while distancing from the comment, said that the party has no intention of implementing an inheritance tax. He said that it was former prime minister Rajiv Gandhi who abolished the Estate Duty in 1985.
"Fact One: Jayant Sinha, then Minister of State for Finance, publicly stated that he wanted to introduce Inheritance Tax in 2014. Fact Two: In 2017, reports emerged that the Modi Sarkar was going to re-introduce inheritance tax. Fact Three: In 2018, the Finance Minister Arun Jaitley praised Inheritance Taxes for spurring large endowments to hospitals, universities in the West. Fact Four: News reports emerged that Modi Sarkar would introduce an Inheritance Tax in Union Budget 2019," Ramesh said in an X post.
Ramesh also shared a 15-minute speech by Sinha from the Forbes India Philanthropy Awards 2013, suggesting that it indicated his support for such a tax.
Congress vs BJP
The idea of an inheritance tax is not new in India. This tax, also called estate duty or death tax in some places, existed in India about forty years ago until it was removed in 1985.
The reintroduction of an inheritance tax has been under consideration for years now. The former Home Minister, P Chidambaram, initially proposed the reinstatement of this tax during a Planning Commission meeting in 2011, presided over by then Prime Minister Manmohan Singh. Chidambaram was the Finance Minister through the initial four years of the UPA-I administration. His suggestion aimed at augmenting tax revenues and addressing the falling tax-to-GDP ratio.
In 2013, the concept resurfaced when Chidambaram proposed an inheritance tax in the final full Budget of the UPA-2 administration. Despite Chidambaram's belief that it could generate revenue and align with the UPA's goals, not all Cabinet members and stakeholders supported the idea, leading to its exclusion from the Budget.
In 2014, under the NDA 1, the new government under Narendra Modi, proposed the introduction of the inheritance tax. Jayant Sinha, then Minister of State for Finance, had publicly vouched for the tax. Sinha supported the idea that such a tax would take away some of the advantages that dynastic business people had and help in levelling the playing field.
In 2017, reports surfaced about the Narendra Modi-led government's plans to reintroduce inheritance tax. In 2018, Finance Minister Arun Jaitley supported the idea, highlighting how hospitals and universities in developed nations benefit from significant endowments, partly due to inheritance tax policies.
Jaitley said the endowments received by major hospitals in the US and Europe ran into billions of dollars and were provided by people and patients who benefitted from them.
"I was analysing why that condition doesn't exist in our country. And one of the reasons I found out was that those societies have very large inheritance taxes. Since we don't have that inheritance tax in India, our charities are not in terms of such endowments," the veteran BJP leader had said.