Sabeer Bhatia Proposes 55% Inheritance Tax to Sharpen India's Competitiveness

Hotmail co-founder Sabeer Bhatia has proposed that India adopt a 55% inheritance tax, arguing that such a levy would help the country become a genuinely competitive economy. In a post on X, he framed the idea around merit rather than revenue, writing that opportunity ought to flow from what individuals build for themselves instead of what they inherit.

Under the structure he outlined, a little over half of any inherited estate would go to the government, leaving the remaining portion with the family concerned.

What an inheritance tax involves

An inheritance tax is levied when a deceased person's property passes to their heirs. Once the estate is divided, the family is required to remit a share of its value to the government. The tax is distinct from the transfer of assets itself and applies specifically at the point of succession.

India's earlier experiment

India has tried this route before. An estate duty regime, introduced through the Estate Duty Act of 1953, remained in force until Prime Minister Rajiv Gandhi scrapped it in 1985. The levy was triggered by a person's death and applied only where the inherited portion of an estate crossed a specified threshold.

Rates under that framework were steep by any measure, climbing as high as 85% on certain properties. Estates valued at Rs 1.5 lakh or more attracted tax at 7.5%. The stated aim was to narrow the gap between rich and poor, though the law was ultimately withdrawn four decades ago.

Bhatia's suggestion reopens a question that has largely stayed off India's policy agenda since then, touching on how the country balances wealth accumulation against equality of opportunity.