Estate Duty Tax

Estate duty (also known as inheritance tax or death tax in other jurisdictions) is a tax levied on the total value of a deceased person's estate — including all assets such as property, investments, bank balances, jewellery, and business interests — at the time of death, before the estate is distributed to legal heirs. In India, the Estate Duty Act, 1953 levied estate duty on inheritances, but this tax was abolished in 1985 — making India one of the countries without an active inheritance or estate tax at the national level. The absence of estate duty in India has significant implications for wealth transfer planning — families can pass on accumulated wealth across generations through inheritance, gifts to specified relatives (which are tax-exempt under Section 56), and family trusts without incurring any tax liability at the point of wealth transfer. However, recipients of inherited assets must pay capital gains tax when they eventually sell those assets — with the original cost of acquisition for the deceased ancestor used as the cost basis for computing gains. While the Indian government periodically debates reintroducing estate duty as an equity-promoting measure, no such legislation has been enacted as of 2025. For high-net-worth Indian families engaged in multi-generational wealth planning, the absence of estate duty makes India a favourable jurisdiction for wealth preservation — though families should maintain comprehensive documentation of inherited asset costs for accurate capital gains computation upon eventual sale.