DEATH TAX - INHERITANCE TAX

BUDGET 2013- 14

Economists say inheritance tax preferable to super- rich tax Actor Amitabh Bachhan recently said you could not escape death and income- tax. If economists’ suggestions are incorporated in the Budget for 2013- 14, one will not be able to escape death tax as well. Economists prefer death tax, also known as inheritance tax, over the socalled super- rich tax as a prescription for raising resources for the government in the Budget. Many economists suggested the new tax at their prebudget consultations with finance minister P Chidambaram earlier this week, an official statement had said. They, however, also cautioned the government to resort to the new tax only when it could prune subsidies. Otherwise, they feel the government would raise money on the one hand, and over- spend on the other. Inheritance tax, called estate duty in India, was scrapped in 1985 by then finance minister V P Singh under the Rajiv Gandhi government. Singh at that time had said benefits from the tax were not as high as cost of its administration. Economists believe that if he indeed levies inheritance tax, it would be at most 30 per cent, the highest rate in income- tax in India currently. In 1984- 85, the highest slab of income- tax was 50 per cent. The Federation of Indian Chambers of Commerce and Industry ( Ficci) also opposed the inheritance tax. Former Ficci President R V Kanoria had said: "We strongly oppose any imposition of Inheritance Tax.” Economists prefer death tax, also known as inheritance tax, over the so- called super rich tax as a prescription for raising resources for the government