Introduction: In this article we are going to discuss the tax implications in case of a deceased Assessee (intestate or without a will). According to Section 159 of the Income Tax Act, 1961 “When 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.” The legal heirs are liable for payment of taxes (including interest and penalty) which were due from the deceased person up to the date of the death. Legal heirs need to file the return of the deceased person for the period beginning from the financial year I.e., From April 1st up to the date of the death. Income earned after the date of death (if intestate) till the end of financial year from the inherited asset shall be considered as legal heir’s income and he would be liable to pay tax on this income. The legal heir is responsible for paying taxes liable on the Income tax return of the deceased. However, he is not personally liable for the taxes due. The liability of the legal heir is limited to the extent to which the assets he inherited are capable of meeting the tax liability. A person has to first register himself as a legal heir on the Income tax portal.
* Legal Heir / Succession Certificate can be obtained through the District Civil Court of your area.
The legal heir can go ahead with the filing of income tax return of the deceased by selecting he option of filing return as representative of the deceased and proceed with ITR filing in the same manner as would have been done if the deceased person would have survived.
The process of filing the income tax returns of a deceased shall be filed in the same manner as it would have been had he survived. Computation of the income of the deceased shall be done from the beginning of the financial year until the date of death. Any other proceeds from the investments or inherited assets of the deceased will become taxable in the hands of a legal heir and he will have to include that income in his ITR. Investment proofs, form 16, Form 26AS etc. bank statements of the deceased shall be taken into consideration for income tax calculation. A legal heir will be required to pay tax for the income earned through an asset after the person’s demise while filing his returns.
OTHER POINTS TO BE KEPT IN MIND:
CONCLUSION: It is advisable for the legal heir to surrender the PAN card of the deceased person after submission of his last income-tax return and payment of tax dues or receipt of a refund if any. If any refunds are due on the name of the lost one then you are not supposed to close down the bank accounts of the same person. Especially if that person whose name is mentioned as the primary person in the books of income tax. Indeed, if there is a common account with the legal heir then it should not be closed rapidly because of simple documentation along with the procedural concern.
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