Rajiv scrapped inheritance tax to save Indira Gandhi's wealth: PM Modi

Prime Minister Narendra Modi on Thursday alleged that former PM Rajiv Gandhi had abolished inheritance tax in 1985 after his mother Indira Gandhi's death to save her wealth from going to the government, as he continued his relentless attack on the Congress over wealth redistribution and inheritance tax.

Modi also claimed at a poll rally in Morena in Madhya Pradesh that after benefitting from the abolition of estate duty--a levy imposed on inherited movable and immovable assets, the Congress now wants to bring back the levy.

As the political slugfest over the issue of inheritance tax escalated on the eve of the second phase of the Lok Sabha polls, the Congress hit back at Modi, calling his remarks on Rajiv Gandhi "lies". The opposition party also cited the then finance minister V P Singh's budget speech in 1985 on scrapping of inheritance tax.

If the Congress comes to power, it will snatch more than half of the earnings of the people through inheritance tax, Modi claimed.

A day after Rahul Gandhi's remark that those who call themselves "deshbhakt" are scared of the 'X-ray' of caste census, Modi also said the Congress wants to confiscate people's jewellery and small savings by conducting an X-ray of their properties and valuables.

"Listen with your ears wide open about the sins that the Congress has committed. I want to put forth an interesting fact. When sister Indira Gandhi passed away, there was a law by virtue of which half portion of the wealth used to go to the government. There was a talk then that Indiraji willed her wealth in her son Rajiv Gandhi's name," the prime minister said.

"To save the money going to the government, the then PM Rajiv Gandhi abolished the inheritance tax."

The Congress wants to reinforce the tax more powerfully now after its four generations reaped benefit of the wealth passed on to them, he said.

An adviser to the opposition party's 'shehzada' (referring to Rahul Gandhi) has now suggested imposition of inheritance tax, he said.

Modi on Wednesday seized upon Congress leader Sam Pitroda's remarks on inheritance tax to step up the ruling BJP's attack on the issue of "wealth redistribution".

The Congress later distanced itself from the comments of the US-based president of its overseas wing and asserted that it has no plan to introduce such a tax.

Modi said that as long as the BJP is there, it will not allow any designs like imposition of inheritance tax to succeed.

"The wealth that you have accumulated by working hard and enduring hardships will be looted from you once a Congress-led government is formed.

"Modi is standing as a wall between you and the Congress' plan to loot you," Modi said.

Hitting back at the prime minister, Congress general secretary Jairam Ramesh said on X, "Yesterday the PM claimed that @INCIndia wanted to impose an Inheritance Tax. Once it became clear that it was actually the BJP that has been propagating an Inheritance Tax, he switched lanes."

"Every time he opens his mouth to speak, the Prime Minister provides fresh evidence of his meanness, pettiness, and his steadfast adherence to lies.
 

"Once again, his lies stand unravelled. Here is the paragraph from then Finance Minister VP Singh's budget speech of March 16, 1985, which proposed the abolition of estate duty. Paragraph 88 of the speech states the reasons clearly," Ramesh said, and shared an excerpt from the speech.

"As both wealth-tax and estate duty laws apply to the property of a person, the former applying to his property before death and the latter after his death, the existence of two separate laws with reference to the same property amounts to procedural harassment to the taxpayers and the heirs of the deceased who have to comply with the provisions of two different laws," Singh had said, according to the excerpt of his speech shared by Ramesh.

"Having considered the relative merits of the two taxes, I am of the view that estate duty has not achieved the twin objectives with which it was introduced, namely, to reduce unequal distribution of wealth and assist the States in financing their development schemes," Singh had said.

While the yield from estate duty is only about Rs 20 crore, its cost of administration is relatively high, he had noted.

"I, therefore, propose to abolish the levy of estate duty in respect of estates passing on after deaths occurring on or after 16th March, 1985. I will come forward in due course with suitable legislation for this purpose," the then finance minister said.

In his post, Ramesh said incidentally, Indira Gandhi gave away her ancestral property in Allahabad way back in 1970 to the Jawaharlal Nehru Memorial Fund.

Echoing his party colleague's sentiments, Congress leader P Chidambaram claimed that the "manufactured" controversies on "redistribution of wealth" and inheritance tax showed that fear has gripped the BJP, which has fallen back on distortion, falsehoods and abuse" as 'Modi ki Guarantee' has vanished without a trace.

BSP president Mayawati, a former chief minister of Uttar Pradesh, had a different take on Pitroda's remarks, saying it has got less to do with the welfare of the poor and more with diverting attention from the failure of the Congress' 'garibi hatao' campaign.