In the US, inheritance tax applies only to a portion of inherited property. That too when the value of this property exceeds a limit. Property up to the value of 10 lakh dollars is exempted from this tax.
Should the property you inherit from your grandfather, great-grandfather or father be taxed? Of course you will answer this in the negative. But do you know what is this Inheritance Tax? After all, why has there been increased excitement in political circles regarding this tax? But before that, know what this inheritance tax is.
What is Inheritance Tax?
Inheritance Tax, as the name suggests, is a tax levied on inherited property. If you have inherited any property from your grandparents or father, then this tax is applicable on it. Don’t worry, tax is not levied in India yet. But the whole matter started when Sam Pietrada said that in America, when a father gives property to his son, the government takes 55 percent of it.
Talking about America, there is no federal law on inheritance tax. However, many states impose two types of taxes: inheritance tax and estate tax. Estate tax is levied on the total value of the deceased person’s estate. Inheritance tax is levied on people who inherit assets or property from their ancestors.
Inheritance Tax: How is it calculated?
Inheritance tax applies only to a portion of the property inherited. That too when the value of this property exceeds a limit. Property up to the value of 10 lakh dollars is exempted from this tax. Tax rates on property above this range from 1 percent to 18 percent. According to an article in Investopedia, in six states of America, if the wife of a deceased person is alive, he is exempted from inheritance tax.
Inheritance Tax: Was this tax ever levied in India?
Inheritance tax in India was abolished in 1985. It was abolished by the government of former Prime Minister Rajiv Gandhi. When this law was in force, this tax was levied on the property transferred to a person’s children or grandchildren upon his death. Under the Estate Duty Act, 1953, estate duty was levied up to 85 percent of the value of inherited property.
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