In India about inheritance tax (Estate Duty)
India's stance on inheritance tax has evolved over time, despite the absence of a current imposition. It's noteworthy to recognize that historically, India did levy an estate duty, which was later abolished in 1985 following the recommendation of the Economic Administration Commission. This shift in policy underscores the dynamic nature of taxation laws and their impact on inheritance practices.
While there may not be a specific inheritance tax in place, it's essential to understand the tax implications that arise from inherited assets. Any income generated from assets inherited after the date of the deceased's death is subject to taxation in the hands of the legal heir. This means that the legal heir must include such inherited income when filing their own income tax return, ensuring compliance with tax regulations.
In US on the same subject of Inheritance tax
In US taxation, an estate emerges as a distinct legal entity upon the demise of a taxpayer. The estate tax, therefore, pertains to the taxation of asset transfers from an individual's estate to the beneficiaries following their death. In 2023, the estate tax exemption stood at $12,920,000 per decedent, with this figure indexed for inflation until 2025. Furthermore, the top estate and gift tax rate remained fixed at 40%. This translates to estates valued at up to $12.92 million being exempt from estate tax, while any amount exceeding this threshold becomes subject to taxation, with rates ranging from 18% to 40% for taxable estates exceeding $1 million above the exemption limit. Upon a person's demise, the responsibility for managing the estate and settling the decedent's final financial affairs typically falls upon a personal representative, appointed by the court as an executor or administrator. In cases where no such representative exists, another individual in possession of the decedent's property may assume this role.
One crucial duty of the personal representative is to ascertain the estate's tax liability before distributing its assets to the beneficiaries. It's important to note that the tax liability attaches to the estate's assets themselves. Should assets be distributed to beneficiaries prior to settling tax obligations, both the beneficiaries and the executor could potentially be held accountable for any outstanding tax debt, up to the value of the assets distributed. This underscores the importance of thorough estate planning and adherence to tax regulations to ensure a smooth transition of assets to the rightful heirs.
In the run-up to elections in India, some political leaders are grappling with the implications of a proposed inheritance tax, leading to contentious remarks on wealth redistribution. However, hasty statements risk inadvertently aiding the ruling party's position. Navigating taxation complexities demands caution and informed discourse to avoid unintended consequences. In electoral politics, every word matters, urging leaders to tread carefully to prevent inadvertently aiding opponents.
CA L.Muralidharan and CPA L.Mukundan
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