Hotmail co‑founder Sabeer Bhatia calls for 55% inheritance tax in India
NEWZA Editorial Team•
⚡ Key Financial Takeaways
Bhatia proposes a 55% inheritance tax that would affect only the top 2‑3% of wealth‑holders.
India has had no inheritance tax since the estate duty was abolished in 1985.
Tax experts say a high rate could force heirs to sell assets or borrow to meet tax liabilities.
Wealthy families are already restructuring holdings through trusts in anticipation of possible future taxes.
💡 Why It Matters
Introducing a 55% inheritance tax would directly address the growing concentration of wealth in the hands of a few Indian families, a factor linked to broader inequality concerns. It could also provide a new source of revenue for the government while reshaping how family businesses plan succession, potentially affecting employment and investment in the economy.
Background India abolished its estate duty under the Estate Duty Act of 1953 in 1985, leaving the country without any inheritance tax. The debate over re‑introducing a levy has resurfaced as wealth concentration has risen sharply among a small elite.
Bhatia’s proposal In a September 29, 2026 post on X, Hotmail co‑founder Sabeer Bhatia argued that a competitive India should reward wealth created through entrepreneurship rather than inherited fortunes. He suggested a 55% tax on inherited assets, emphasizing that it would not affect 97‑98% of Indians and would be aimed at the super‑wealthy who control a disproportionate share of the nation’s resources.
Expert reactions **Himank Singla**, partner at SBHS & Associates, warned that a 55% rate could dramatically reduce the net value heirs receive. Using a hypothetical Rs 10 crore estate, he calculated that Rs 5.5 crore would go to tax, leaving Rs 4.5 crore for beneficiaries, subject to exemptions and thresholds. Singla highlighted liquidity issues when wealth is tied up in property, family businesses or agricultural land, noting that heirs might need to sell assets or raise debt to settle the tax.
**Pranshu G**, partner at Ashok Pranshu & Co, said the mere prospect of such a levy has already prompted high‑net‑worth families to revisit succession planning. Many are moving assets into family trusts or arranging lifetime transfers to minimise future tax exposure. He cautioned that existing structures could be scrutinised under a new law, potentially pulling some arrangements into the tax net.
Potential implications A high inheritance tax could generate significant fiscal revenue, but it may also disrupt family‑run enterprises that lack liquid cash despite high valuations. The policy could accelerate the shift toward trust‑based ownership, alter investment decisions, and influence how wealthy families manage inter‑generational wealth transfer.
Next steps The proposal has sparked public debate, but no formal legislative initiative has been announced. Policymakers, industry bodies and tax authorities are expected to weigh the economic and social trade‑offs before any bill is drafted.
🏛️ Background & Context
India’s last inheritance‑related levy, the estate duty, was repealed in 1985. Since then, wealth transfers have occurred without a dedicated tax, contributing to the rise of dynastic fortunes. Global examples, such as the United Kingdom and several European nations, show that inheritance taxes can be structured to target only the very wealthy while preserving wealth for the majority.
👁️ What To Watch Next
Watch for any official statements from the Ministry of Finance or the Finance Committee of Parliament regarding a possible inheritance‑tax bill. Industry groups and wealthy families are likely to lobby for exemptions or thresholds, and court rulings on asset valuation could shape the final design of any legislation.
