Income Tax Compliances in case of Death of a Taxpayer

In case of an unfortunate event of death, the responsibility for deposit of tax, filing of Income-tax Return (“ITR”), facing assessments is shifted to the legal heir / legal representative of the taxpayer.

As per section 159 of the Income-tax Act (“the Act”), where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.

Further, for the purpose of any assessment, reassessment or recomputation under the Act, 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;
• all the provisions of this Act shall apply accordingly.

Further, the legal representative of the deceased shall be deemed to be the assessee for the purpose of the Act.

This article elucidates the process for legal representatives to register on the Income-tax portal, compute income, and navigate legal requirements.

Process for Registration as a Representative Assessee on Income-tax Portal for filing of ITR

In order to file the ITR of a deceased person, the legal representative has to register itself as a Representative Assessee on the Income-tax portal by following below steps :

Step:1 Login to ‘e-Filing’ Portal https://www.incometax.gov.in/iec/foportal/​ using your PAN and password.

Step:2 Go to the “Authorised Partners” tab at third menu from left side and Click “Register as Representative Assessee”.

Step:3 Click on “Let’s Get Started” and then select “Create New Request”.

Step:4 Select Representative category under “Category of Assessee who you want to represent” as “Deceased (Legal heir)” and provide the mandatory details like PAN and Date of Death of deceased person,  Reason for Registration etc.

Step:5 Attach the following necessary documents:

• Copy of PAN Card of the deceased,
• Copy of Death Certificate,
• Copy of Legal heir proof as per the norms,
• Copy of the order passed in name of the deceased (Mandatory only if the reason for registration is ‘Filing of an appeal against an order passed in the name of deceased’),
• Copy of Letter of Indemnity (optional)

Following documents are accepted as Legal Heir Proof:

1. Legal heir certificate issued by the court of law

2. Legal heir certificate issued by the local revenue authorities (Office of District Magistrate)

3. Surviving members certificate / legal heir certificate issued by the local revenue authorities (Office of District Magistrate)

4. Registered Will

5. Family pension certificate issued by the State / Central Government

6. Letter issued by the banking or Financial Institution in their letter head, with official seal and signature mentioning the particulars of nominee or joint account holder to the account of the deceased at the time demise.

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Step:6 Click on ‘Proceed’ and ‘Verify the Request’

Step:7 Click ‘on continue to Submit’

Note: Once one has registered as a legal representative, request will be sent to the e-Filing Admin for approval. The e-Filing Admin will check the authentication of the request details and may Approve/Reject the request and Upon Approval/Rejection, an e-mail and SMS will be sent to the registered mail and contact number of the user, who has raised the request.

Once, the request to act as a legal representative is approved, a separate drop down is created to act as a Legal Heir along with Self while login into the Income-tax portal of legal representative and the login credentials of the deceased will be permanently disabled, as now onwards, all tax payments, ITR filing and litigation related matters will be done by legal representative.

Computation of Income in the hands of the Deceased Taxpayer and its Legal Representative

In case of a death of taxpayer, income till the date of death of a taxpayer is offered to tax in the hands of deceased taxpayer, the ITR of which will be filed by its legal representative. Income after the death will be included in the total income of the legal representative which will be offered to tax under his PAN.

Generally, after the death, due to formalities for change of name in banks, share broker, mutual funds etc., generally it takes around 2-3 months to get all investments in the name of legal representative. Therefore, income earned during these 2-3 months will be in the name of deceased but same is to be offered to tax by legal representative in his ITR.

For example – if the taxpayer dies on June 10, therefore, income from April 1 to June 10 will be offered to tax in the hands of deceased taxpayer and any income after June 10 will be included in the total income of the legal representative.

Are there is any mandatory requirement to Intimate about Death of the Taxpayer to Income-Tax Authorities?

In the case of Savita Kapila [Legal Heir] v/s ACIT [(2020) 118 taxmann 46 (Delhi)], Hon’ble Delhi High Court observed that “there is no statutory requirement imposing an obligation upon legal heirs to intimate the death of the assessee” and quoted that “The Court is of the opinion that in the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income-tax department. After all, there may be cases where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant “.

Although it is mentioned in the above case that it is not mandatory to intimate the death of the taxpayer to the Income-tax Authorities. However, in order to avoid un-necessary litigation by the legal heir, better to intimate the Jurisdictional Assessing Officer (“AO”) of the deceased through a copy of letter along with copy of PAN of deceased and legal heir, Death certificate and Legal heir Certificate.

AO’s office is located where your PAN was issued. You can also access the details of your AO through the account on Income-tax e-filing portal through following steps:

Step – 1  Login to account through PAN and password

Step – 2 Click on “My Profile” on right top corner under your Name

Step – 3 Click on Jurisdictional Details in left tab

Author can be reach out for any queries at email ID – canavneetsingh1@gmail.com

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Disclaimer: This article serves an educational purpose and should not be considered as professional advice. Consultation with a qualified individual is recommended before making any decisions based on the content provided. The author bears no responsibility for any actions taken based on this article.