The income tax return needs to be filed for the income earned by during a financial year. Even if the person in question is deceased, someone has to file the ITR on his/her behalf. PolicyBazzar.com explains how one should go about it.
Who will file the Income Tax Return, or ITR, on behalf of the deceased?
As per the Section 159 of the Indian Income Tax Act 1961, the legal heir is liable to file the ITR and pay the income tax dues, if any. The online provision to file the taxes makes it easy for everyone. Income Tax Rebate calculation can be done by a chartered accountant.
The legal heir will be considered the assesse. As applicable on the deceased assesse, all the Income Tax provisions will be levied accordingly on the legal heir. The legal heir will need to register him/herself as the legal successor of the decedent online, on the income tax website. This will allow him/her to file the ITR online on the behalf of the deceased.
Calculating the income earned by the deceased
The total earnings of the deceased from the start of the fiscal year till death will be counted as his/her total income. The profits earned by the deceased from the inherited assets are taxable in the hands of the legal heirs.
For example: A, who expired on November 20, earned Rs 70,000 as interest every month on his fixed deposits. The computed income will be:
Income in the hands of the deceased: Rs 70,000 x 8 months = Rs 5, 60,000
Income in the hands of the legal heir (to be revealed in personal ITR of the Legal Heir): Rs 70,000 x 4 months = Rs 2, 80,000
Legal responsibility of the legal heir
The legal heir is liable to file the ITR on behalf of the deceased. He also needs to deposit any balance income tax which must be paid.
In case, the deceased person has received any notice before their death, then the legal heir will be held responsible to carry out the proceedings after the death of the deceased person. It will be a personal liability of the legal heir to file the taxes on behalf of the deceased.
Even after death, the deceased is liable to pay any penalty or interest charged on him by the Income Tax Authorities. Though, the amount that the legal heir is required to pay on the deceased’s behalf shall not be more than the assets that he inherits.
Simply put, the legal heir is not accountable to recompense the taxes from his own pocket.
Refund of income tax
The Income Tax Act follows the same provisions as above in case of refund amount (in case it is due). It is advisable to get the refund amount in a joint account. If the deceased tax payer holds a joint account with the legal heir, then it becomes convenient to receive the amount. In case of absence of a joint account, the account can be operated by the nominee who is appointed by the deceased. In the absence of a nominee, the legal heir can operate the account.
Follow the procedure to register yourself as the legal heir on the Income Tax Website
- Using the credentials of the legal heir, simply login to the Income Tax e-filing portal
- Go to my account > click on service request type and follow the below mentioned steps
Filing-ITR-After-Death
- Click on Request type as New Request. Select Request Category and click on Add Legal Heir Request.
- Click Submit
- Select the type of request – Click on New Request
- Fill the details of the deceased - Date of Birth, Name and PAN No.
- Select ITR-file-after-death
- Submit the files to be uploaded
Note the documents that you will need to submit to register yourself as the legal heir -
- Deceased Person’s Documents - Death Certificate, PAN Card
- Legal Heir’s Documents - Self-attested PAN Card, Certificate of Authentication or Affidavit in the presence of a notary public
As for the Legal Heir Certificate, you can submit any of the below mentioned documents as proof -
- Legal heir certificate - Issued by the Court of Law and Local Revenue Authorities
- Certificate of existing family members - issued by the Local Revenue Authorities
- Registered Will
- Family pension certificate - issued by the State or Central Government
If you do not have any of the aforementioned documents, you can get an affidavit created in the presence of a notary public. Also, you need to get it duly signed by the other legal heirs (if any), approving you as the legal heir for the Income Tax purposes of the deceased.
Once all these documents are submitted, a request will be sent to the Income Tax Authorities. They will send the acceptance and rejection of the application after closely reviewing these documents. You will receive an email confirming the same. This will further authorize you for E Filing Income Tax calculation on behalf of the deceased.
Points to Remember
- In case of death of the taxpayer of the Hindu Undivided Family (HUF), the HUF will still continue to remain in existence and the income that is earned by the HUF will continue to be taxed in the name of the HUF even after the death of the taxpayer. The senior most member of the family will become the taxpayer and will file the income tax return after the death of the original taxpayer.
- No other charges will be levied while filing the ITR or calculating the income tax apart from the ones listed above. The ITR of the deceased should be filed in the same format and time as applicable to other taxpayers.
- The legal heir can be accountable to face the legal penalty proceedings on behalf of the deceased. Rest assured that the legal heir will only be liable for the assets that he has inherited from the deceased.
- In case of a single legal heir, the person can act as a legal representative for filing ITR of the deceased
- For multiple legal heirs, any one person needs to be authorized as the legal heir for the purpose of filing ITR.
- In a situation, where all of them want to be registered as legal heirs for ITR purposes - they can file the ITR jointly. But they will need to file it in the capacity of Association of Persons (AOP) or Body of Individuals (BOI)
Do not risk skipping the filing of income tax return after the death of a family member whose earnings fell in a taxable slab.
