Press Information Bureau

Government of India

Ministry of Finance

20-December-2012 17:54 IST

There is proposal at present to reimpose the Estate Tax again.

The Estate duty was abolished for the following reasons:

(i) The contribution of estate duty to the Government revenues over the years had been insignificant.

(ii) Percentage of estate duty to gross tax revenue was steadily falling. It was 0.22 percent in 1972-73, 0.5 percent in 1975-76 and 0.13 percent in 1981-82.

(iii) The proceeds of estate duty were low despite an extremely progressive rate schedule.

(iv) The cost of administration of the Estate Duty Act, 1953 and the cost of compliance to the tax payer was high.

(v) Both wealth-tax and estate duty lows were applicable to the property of a person, the former applying to his property before death and the latter after his death. The existence of two separate laws with reference to the same property was considered a burden on the taxpayers and the heirs of the deceased.

This was stated by the Finance Minister Shri P. Chidambaram in reply to a question in the Rajya Sabha today.

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DSM/RS/bs

Estate tax reimposition: government states no proposal to reinstate estate tax, citing low revenue and high costs. No present proposal exists to reimpose estate tax; the Government explained estate duty was abolished because it produced negligible revenue, its share of gross tax receipts fell over time, proceeds remained low despite progressive rates, administration and compliance costs were high, and overlap with wealth tax created burdens on taxpayers and heirs.