“I think an inheritance tax is needed…”: Nithin Kamath on wealth, inequality, and the Zerodha dilemma

Rising economic inequality in India has reignited debates on wealth and inheritance taxes, with Zerodha founder Nithin Kamath making a bold case for taxing generational wealth.

“I think an inheritance tax is needed in this country,” Kamath said in a podcast by Jivraj Singh Sachar, saying it was unfair for wealth to accumulate over generations without any redistribution.

“Every time a generation gets a certain amount of wealth, they need to pay some taxes from that amount. It’s only fair.” Although he acknowledges that implementing such measures in India may be a challenge, he believes the country will eventually need to go down this path.

Kamath’s views are consistent with French economist Thomas Piketty’s recent proposal for targeted wealth and inheritance taxes to address India’s widening inequality gap. Piketty proposed an annual wealth tax of 2% on assets exceeding INR 100 million and a 33% inheritance tax on properties of similar value, claiming it could boost India’s revenues by 2.73% of GDP annually.

However, Kamath softened his stance by emphasizing the responsibilities of high net worth individuals.

He said: “I say to every wealthy person: You must make more efforts to donate your wealth,” stressing the moral dimension of redistribution of wealth.

The conversation is gaining momentum amid former RBI Governor Raghuram Rajan’s opposition to wealth taxes. Rajan has called Piketty’s recommendations an “impossible economic pie,” claiming that wealth taxes often fail to generate meaningful revenues and penalize success. “The wealthy always have a way around this problem,” Rajan said, suggesting that India should instead focus on fostering entrepreneurial innovation and improving resource allocation.

Kamath also spoke about the challenges of building large-scale projects in today’s highly competitive capitalism. “It is almost impossible to build another Zerodha starting today,” he said, noting the pressure on founders to over-promise growth to secure financing. Instead, he urged business leaders to under-promise and over-deliver, and promote sustainable growth.