The case for introducing inheritance tax in India

Abstract

In the post-liberalization era, while sustained economic growth in India has facilitated significant wealth creation, massive tax evasion and avoidance by the wealthy class had limited the government’s capacity to distribute the fruits of growth, contributing to widening income and wealth inequality. This creates sufficient grounds for introducing inheritance tax to promote inter-generational equity. However, the government must tread with caution, weigh unintended consequences, and take a holistic approach to addressing issues of distributional inequity in the country.