‘I think inheritance tax is required…’: Nithin Kamath on wealth, inequality, and the Zerodha dilemma

India’s growing economic inequality has reignited debates about wealth and inheritance taxes, with Zerodha founder Nithin Kamath making a bold case for taxing generational wealth.

“I think inheritance tax is required in this country,” Kamath said in a podcast by Jivraj Singh Sachar, arguing that it’s unfair for wealth to accumulate across generations without any redistribution. 

“Every time a generation receives x amount of wealth, they need to give some tax out of that. It’s only fair.” While he acknowledged that implementing such measures in India might be challenging, he believes the country will eventually need to take this route.

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

However, Kamath tempered his stance by emphasizing the responsibilities of wealth holders. 

“I tell everyone who is wealthy: you have to do more to give it away,” he said, underscoring the ethical dimension of wealth redistribution.

The conversation gains traction amid former Reserve Bank of India Governor Raghuram Rajan’s opposition to wealth taxes. Rajan called Piketty’s recommendations “pie in the sky economics,” arguing that wealth taxes often fail to generate meaningful revenue and penalize success. “The wealthy always have a way around it,” Rajan said, suggesting India focus instead on fostering entrepreneurial innovation and optimizing resource allocation.

Kamath also reflected on the challenges of building large-scale ventures in today’s hyper-competitive capitalism. “It’s next to impossible to build another Zerodha starting today,” he said, pointing to the pressures on founders to overpromise growth to secure funding. Instead, he urged entrepreneurs to underpromise and overdeliver, fostering sustainable growth.