Government mulls revival of estate duty, tax on cash transaction
NEW DELHI: As the revenue collection is still far below the expectation, the government is considering reintroduction of some taxes including Estate Tax.“We do not have enough headroom to go for massive tax cuts. While the interim budget has already announced Income Tax exemption upto Rs 5 lakh of annual income, the (revenue) department has proposed to reintroduce the Estate Tax and cash transaction tax in the upcoming budget,” a senior official from the Finance Ministry told TNIE.
Estate Tax or inheritance tax is the tax levied on by the government when a person receives money or property from the estate of a deceased person. This tax was abolished in India in 1985. According to the sources, this tax was proposed even in 2014 but then Finance Minister Arun Jaitley was not in its favour and said it will not add much to the tax kitty. However, with new Finance Minister Nirmala Sitharaman taking over charge, the proposal is back to the discussion table.
“More than tax collection, this along with Cash Transaction Tax will bring in transparency in declaration of income and wealth. The proposal says tax to be exempted on value up to Rs 3 crore,” the official added.
Another proposal is to tax cash withdrawal from the bank above Rs 10 lakh per annum. This is also not a new proposal as in 2005, P. Chidambaram, imposed Banking Cash Transaction Tax (BCTT) of 0.1 per cent tax on cash withdrawals over Rs 10,000. The proposal did not go down well with people and after protest; this was eventually scrapped in 2009.
In the interim Budget 2019, the then interim FM Piyush Goyal has already announced raising the standard deduction limit from Rs 40,000 to Rs 50,000, tax rebate for Rs 5 lakh income category under section 87Aand also opened the gate for more tax reliefs by announcing that income above Rs 6.5 lakh, will also be free of taxes as well, if they make investments in government schemes. The Union budget, to be presented on July 5, is likely to throw more clarity on this.