Concept Of Gift Tax
The second is the Gift Tax. When you give an expensive gift to someone, the tax that needs to be paid on it. This Gift Tax was introduced in 1958. And it is important to mention here that people used to avoid paying inheritance tax through the loophole in the Gift Tax. Suppose you were old, and you knew that you would live for 5 to 6 more years only. Instead of awaiting your death, you would ‘gift’ your property to your children. So that they don’t inherit your property after your death. Rather you gift your property to them.
By doing this, you avoid paying inheritance tax. But this too is a tax that used to be in force earlier. Since 1st October 1998, the Indian Government abolished this Gift Tax. After that, any gift given isn’t subject to any tax. Although in 2004, a new provision had been introduced. According to it, if you receive gifts of more than ₹50,000 in a year, then it would be taxable.
But the difference is that, in this new rule, family members are exempted. So you can give gifts to your family members and relatives, without paying tax. The situation in India is such that one can give gifts to family members very easily, without worrying about taxes. No inheritance tax exists. And on the other hand, we see that Nepotism is very common. Children born into rich families, are very lucky and perhaps it is unfair to the others.
To know the answer to this question, we need to look at other countries. We need to see how inheritance tax is working out for other countries. Is it or is it not successful? Unsurprisingly, there are many countries in the world where inheritance tax does exist or some other taxes similar to the inheritance tax.
