Speculation about tax cuts and rebates has started gaining momentum ahead of announcement of the Union Budget. Finance Minister Arun Jaitley has time and again said that he is against higher tax burden on the middle class.
Analysts say since Mr Jaitley is unlikely to target the salaried-class in the upcoming Budget, the high-income group may have to bear the brunt of higher taxes. One tax that analysts expect to make a comeback is the inheritance or estate tax, which was abolished in 1985.
A Twitter post by Minister of State for Finance Jayant Sinha last year has added to the belief that the estate tax might be brought back.
"Relax, any inheritance tax would only apply to very large inheritances - say over Rs 25 crore," Mr Sinha tweeted from his official twitter handle.
The inheritance of estate tax is aimed to raise revenues from those who inherit wealth. Many analysts see this as a measure to tax the super-rich people in the country.
"In the current economic scenario, the imposition of inheritance tax seems to be a viable option as it would lead to sizable generation of revenue for the government," said Mayank Grover, a lawyer with India's leading law firm.
According to Mr Grover the prevailing asset value is much higher in contrast to the 1980s when inheritance tax was scrapped. The restoration of inheritance tax will help reduce the present wealth inequality in the country, he added.
Amish Tandon, an independent corporate lawyer says the reinstatement of estate duty may be viewed by the privileged class (especially family-run establishments where assets are inherited by the next-of-kin) to be "discriminatory" or " anti-rich" measure.
"This may induce them to take evasive action by exploring alternate options such as taking businesses across the border or entering into benami transactions etc.," Mr Tandon said.
This is not the first time that the debate on inheritance tax has cropped up. In 2012, former Finance Minister P Chidambaram had indicated his desire of re-introducing inheritance tax. However, he stopped short of bringing in the legislation and merely levied higher surcharges on income of Rs 1 crore and upwards.
The inheritance tax is in practice in many countries across the world. In the United States the tax is as high as 40 per cent of the total value of the inheritance.
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