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Filing of return in case of a deceased person

Filing of return in case of a deceased person

We all know the rules and regulations about filing Income Tax Return when we are alive. However, many of us don’t know what the Income Tax rule states in case the death of the taxpayer. It is common that after the death of the taxpayer, his/her spouse, legal heirs or family members never filed an IT return. But it is the responsibility of spouse, legal heirs or family members to file the IT Return!

There is a section in Income Tax that specifically mentions the rules about this situation. The whole details are available in section 159 of the Income Tax Act, 1961 . According to section 159 of the Income Tax Act, 1961 , if a person dies, then his legal representatives shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the similar manner and to the same extent as the deceased.The legal representative of the deceased has to file the income tax return for the income on which the deceased would have been liable to pay income tax if he had not died. On the return, the name should be mentioned as “late (name of deceased) through legal heir (name of person filing)”. The legal heir should also submit a copy of the death certificate of the deceased, and submit the Permanent Account Number Card (PAN Card) of the deceased.Advance tax payments and self assessment tax payments are also to be done by the legal representative. If the tax liability is large, there can be a dispute between heirs. The tax is to be recovered from the estate of the deceased. Thus, all the legal heirs are liable upto the extent of the assets that they inherit. Income of the deceased after the time of his death would be taxed in the hands of the legal heirs inheriting the respective assets.

Points to remember

  • The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
  • Any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
  • Any proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative; and
  • All the provisions of this Act shall apply accordingly.
  • The tax must be payable from 1st April to death of the taxpayer.
  • There is no different process to file the return of a deceased taxpayer. It is same as you used to file IT return either through online or through offline.
  • Legal heir is not responsible to pay the income tax dues from his own pocket. But he is liable to pay the dues on behalf of the deceased income or assets. The legal heirs are liable up to the extent of the assets that they inherit.
  • If there is any refund due to the taxpayer, then such refund will be credited to the bank account of an income tax payee.

Liability of Legal heir in case of Penalty/Demand

The legal heir is responsible for the tax payable and also for the other sum i.e. Penalty, fine or interest which the deceased would have been liable had he not died. It means that the Penalty proceedings for a default by the deceased can also be initiated against the legal heir. However his liability would be limited to the extent of the assets inherited by him from the deceased.

How to file the IT return on behalf of the deceased IT Payee?

1) The first step is to get the Legal Heir Certificate.  Below listed documents are considered as valid.

  • Legal Heir Certificate issued by a court.
  • Legal Heir Certificate issued by local revenue authorities.
  • Surviving family member certificate issued by local revenue authorities.
  • The registered WILL.
  • The family pension certificate, issued by State/Central Govt.

2) Calculate the income of the deceased (exactly like an individual calculation and there is no change in this process). Before proceeding further, collect the below details as a proof.

  • Collect all bank statements of a deceased IT payer.
  • Collect Form 16 and 16A
  • This collection of bank statements and the Form 16 or 16A makes sure to tally the income.

3) Get the notarized affidavit for filing IT return on behalf of a deceased.

So documents required for filing IT Return on behalf of the deceased are as below.

  1. Copy of Death Certificate
  2.  PAN Card copy of deceased
  3.  PAN Card of the legal heir (with self-attested)
  4.  Legal Heir Certificate
  5.  Notarized affidavit

Scan all above documents for uploading purpose.

4) Get the Digital signature Certificate (DSC) of legal heir. 

5) Once you completed above steps then you have to file IT Return.
Following is the process for filing the return:

1.Download the ITR Form applicable to the deceased, fill the ITR Form and generate the XML File.

2.Go to Income tax website –https://incometaxindiaefilling.gov.in

3.Login to e-filing portal using Legal heir credentials

4.Go to e-file and upload the return

5.Fill the following details and select the XML File

1.PAN – Select the PAN of the deceased.

2.ITR Form Name – Select the ITR Form to upload (i.e. ITR 1, 2, …)

3.Select Assessment Year

4.Upload the XML File

5.Legal heir can digitally sign the ITR of deceased using his Digital Signature Certificate

6.Click Submit