Did you know that deceased people can also be taxed? As ironic as it sounds, the income tax returns for a deceased person has to be filed, if he/she has taxable income. His legal heir/representative needs to file the return on his behalf for the income earned till the date of death. The legal heir has to register himself at the income tax website for filing the return on behalf of the deceased. In this article, we will discuss how to file the income tax return for the deceased by a legal heir.
Define legal heir
Legal heir, in the eyes of law, is the person who represents the assets of deceased. legal heir certificates could be:
- 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 notarized.
Register as legal heir
The legal heir has to register at the income tax website as a legal heir. For this, we should know who the legal heir is and the procedure to register as a legal heir on the government income tax website.
Registration as a legal heir is mandatory for e-filing of return on behalf of the deceased person. The PAN of both the deceased person and legal heir should be registered in the e-filing portal. However, if the deceased person PAN is not registered, then the legal heir can register on behalf of the deceased. Following are the steps for the registration of Legal heir:
1st Step – Go to https://incometaxindiae.gov.in
2nd Step– Login to e-filing portal using legal heir credentials
3rd Step – Go to Authorized Partner and register as Representative.
4th Step –
- Select the type of Request – Create new Request
- Select the Category of assessee who you want to represent Deceased (Legal Heir)
- Fill below information of Deceased person & Legal Heir:
Step 5 – Fill the following details of Legal heir
Step 6 – Upload below documents and submit
Registration approval process
After completing the above process, Legal Heir 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.
File Tax return as legal heir on behalf of Deceased
Once the request for registration as legal heir is approved, you can file return as legal heir on behalf of deceased. Following is the process for filing the return:
- Download the ITR Form applicable to the deceased, fill the ITR Form and generate the XML File.
- Go to Income tax website –https://incometaxindiae.gov.in
- Login to e-filing portal using Legal heir credentials
- Go to e-file and upload the return
- Fill the following details and select the XML File :
- PAN – Select the PAN of the deceased.
- ITR Form Name – Select the ITR Form to upload(i.e. ITR 1, 2, …)
- Select Assessment Year
- Upload the XML File
- Legal heir can digitally sign the ITR of deceased using his Digital Signature Certificate
- Click Proceed To Verification
Calculate the income of the deceased
As a legal heir, you have to file the return on behalf of the deceased for income till the date of death. Calculate the income of the deceased from the start of the year till the date of death, and thereby the tax payable on it in the same manner as if the deceased is alive. If you don’t know the exact income, then you should refer Bank Statements, investments and other relevant documents necessary for income tax calculation.
Any income earned after the date of death from the assets inherited from the deceased is taxable in the hands of the legal heir. Legal heir should include this income inherited from the deceased in his own income while filing own income tax return.
Tax calculation of the deceased with an example
Mahesh who has a rental income of Rs 30,000 per month and interest income of Rs 10,000 per month dies on 20th Sep 2020. Her legal heir needs to file the return on behalf of Mahesh for the period 1st April 2020 to 10th Sep 2020.
Legal Heir need to include income in the return of Mahesh would be:
|Income from House Property Rental Income (From 1st April 2020 to 20th Sep 2020)||INR 1,70,000|
|Income from other Sources Interest Income (From 1st April 2020 to 20th Sep 2020)||INR 56,667|
Legal Heir need to include income in own return for F.Y 2020-21 :
|Income from House Property Rental Income (From 20th Sep 2020 to 31st March 2021)||Rs 1,90,000|
|Income from other Sources Interest Income (From 20th Sep 2020 to 31st March 2021)||Rs 63,333|
Property tax & Standard deduction of 30% is allowed to both on the rental income.
Tax liability of the legal heir
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. Legal Heir is not liable over and above assets received from Legal heir. The liability of the legal heir is limited to the extent to which the assets he inherited are capable of meeting the liability.
Tax liability in case of penalty or 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. Legal heir may need to face penalty proceedings for the defaults made by deceased to the extent of assets received from deceased person.