What is Estate Duty / Inheritance Tax? UPSC notes
Estate duty (or inheritance tax) is a tax levied on the property, money, or assets that a person leaves behind after death.
What is Estate Duty / Inheritance Tax? Estate duty (or inheritance tax ) is a tax levied on the property, money, or assets that a person leaves behind after death . It is collected before heirs (children, spouse, relatives) receive the inheritance . The rate of tax depends on the value of the estate and government rules. Example 1: Estate Duty Suppose Mr. X passes away and leaves property worth ₹5 crore . The government says estate duty = 10% of estate value above ₹1 crore . Tax = (₹5 crore – ₹1 crore) × 10% = ₹40 lakh . The heirs will receive only ₹4.6 crore (after paying tax). Example 2: Inheritance Tax In some countries, heirs directly pay tax on what they receive : Mr. Y leaves ₹2 crore to his daughter and ₹1 crore to his son. Tax rule: 20% inheritance tax. Daughter pays 20% of ₹2 crore = ₹40 lakh . Son pays 20% of ₹1 crore = ₹20 lakh . In India’s Case Estate Duty was introduced in 1953 but abolished in 1985 (Rajiv Gandhi govt) because collection was low and people found loopholes. ✅ Today, India does NOT …