Planning Commission Deputy Chairman Montek Singh Ahluwalia today favoured imposition of inheritance tax as part of overall direct tax reforms.

"I think in any comprehensive reform of the direct tax system, if somebody were to say that we should have an inheritance tax, it should be considered as part of overall tax reforms," Ahluwalia said in an interview to private news channel CNBC-TV18.

Earlier, Home Minister P Chidambaram, who is a former finance minister, had pitched for imposition of inheritance at the full Planning Commission meeting headed by Prime Minister Manmohan Singh last month.

"We are really underestimating our capacity to raise resources, especially tax resources. Since non-plan expenditure is difficult to contain, the tax-GDP ratio must be raised especially by taxing conspicuous consumption and imposing inheritance tax," Chidambaram had said.

The government had abolished the inheritance tax or estate duties in 1985. (PTI)