Even after a person dies, he cannot be released from his tax duty. His legal heir or representative will need to file the income tax return (ITR) on his behalf for the income earned till the date of death. For this purpose, the legal heir will have to register himself at the income tax website.
Who Is A Legal Heir?
A legal heir, in the eyes of the law, is the person who represents the assets of the deceased. To register as a legal heir, any of the following documents are accepted as legal heir certificates:
- The legal heir certificate issued by the court of law
- The legal heir certificate issued by the local revenue authorities.
- The certificate of the surviving family members issued by the local revenue authorities.
- The registered will of the deceased person
- The family pension certificate issued by the state/central government.
- The most common certificate available is the certificate of surviving family members
- Issued by the local revenue authorities (municipality, nagarpalika). This certificate is
- usually issued in regional language, so the legal heir is required to translate it into English/Hindi and get it duly notarised.
Responsibilities Of The Legal Heir
The legal heir is responsible for the tax payable, penalty, fine, or interest, which the deceased would have been liable had he not died. It means that the penalty proceedings for default by the deceased can also be initiated against the legal heir.
If there is any income earned after the date of death from the assets inherited from the deceased, it will be taxable in the hands of the legal heir. The legal heir should include this inherited income in his own ITR.
Let’s understand through an example. If a person, who has a rental income and interest income dies on September 20, 2021, her legal heir will need to file the return on her behalf for the period from April 1, 2021 to September 20, 2021.
The income to be included in the deceased person’s ITR will be income from house property (rental income), income from other sources (interest income).
The legal heir will need to include income from rental income and interest income in his or
her ITR.
However, the legal heir’s liability would be limited to the extent of the assets inherited from the deceased.
For instance, if a person receives Rs 8 lakh as his share from his father’s property and his father’s tax liability is Rs 9.5 lakh, then he cannot be made liable to pay more than Rs 8 lakh. The liability of the legal heir shall be limited to the value of the assets inherited.
Property taxes can be claimed in the return of the deceased if he paid for them or of the legal heir if the legal heir paid them. Standard deduction of 30 per cent is allowed to both on rental income.
The Tax Filing Process
Calculate The Income: Before you file the return of the deceased, you must calculate his or her income from the start of the year till the date of death. If you don’t know the exact income, you should refer to bank statements, investments and other relevant documents necessary for income tax calculation.
Open An ITR Account: The return of income in case of a deceased person is to be filed by the legal heir. In such a case, the legal heir will first have to register himself as representative assessee on the income-tax portal available under ‘Authorized Partners’ tab. This will be done from the account of the legal heir using his /her login.
“For doing so, the legal heir will have to create a new request and follow the steps provided on the portal, upload mandatory documents and submit the request. Post submission of request, the tax authorities will verify and either accept or reject the request. The legal heir will be allowed to file return of income for deceased only when confirmation from the tax authorities is received,” says Anita Basrur, direct tax, Sudit K Parekh & Co.LLP, a chartered accountancy firm.
Documents Required:
- Death certificate.
- PAN Card of the deceased
- Self-Attested PAN card copy of the legal heir
- Legal heir certificate. (As described above)
- Order passed in the name of the deceased if applicable
- The legal heir should mandatorily provide the ‘reason for registration’ as a representative assessee.
Registration Approval Process: After completing the above process, the legal heir’s request is sent to the e-filing administrator. “The e-filing administrator will verify the request and approve /reject as applicable. Once the request is approved, one can use all services for the legal heir and for the deceased. If the request is rejected, the intimation for rejection would be received by a valid reason for such rejection. The reasons could be uploading of incorrect information or documents, etc. Accordingly, the legal heir should take the necessary action to rectify such rejection,” says Archit Gupta, CEO and founder, Cleartax, a tax portal.
Final Filing: Once the request for registration as legal heir is approved, you can file the return as the legal heir on behalf of the deceased. ITR can be filed by following standard procedure, which is followed by any individual.
The return would be e-verified using various methods followed, such as Aadhaar OTP, net banking, etc., or it can be verified by the legal heir who can sign the ITR acknowledgement and a copy of the same can be sent to Central Processing Centre (Bengaluru).
