Taxes aren't excused, even after death!

Posted by Namita Gad on 19 Dec, 2017

Taxes aren’t excused, even after death!

Benjamin Franklin, once wrote in a letter that “In this world nothing can be said to be certain, except death and taxes”. This means that taxes being levied is certain and one cannot escape them even after death. And if you are the legal representative or legal heir of any of your family members then you have one more additional obligation of filing her/his return on death of that person. Yes, filing income tax return of a deceased person is also required under the Indian Income Tax Law!

If one of your family members has died during the financial year and s/he was liable for any taxes then you, as a legal heir, must file income tax return on her/his behalf. Section 159 of the Income Tax Act, 1961 puts onus on the legal representative of the deceased assessee to file tax return. Generally, the spouse or a close relative takes charge as a legal representative. But in case of a will, the executor is held responsible to pay the liability.

Computing the income of a deceased person is complex due to non-availability of relevant information and documents. Moreover, not full year’s income is taxed in the deceased person’s name. Income from start of the year till the death is computed and thereby tax liability is arrived in the same manner as if the deceased is alive. Any taxes on the income earned out of assets of inherited property would be the liability of the legal heir.

Process of registering and electronically filing income tax return as a legal heir:

  1. Go to income tax website
  2. Legal heir/representative to login to their e-filing account
  3. Go to My Account and request to register as legal heir of deceased person
  4. Upload the following documents:
    • Copy of Death Certificate
    • Copy of the PAN Card of the deceased
    • Self-Attested PAN card Copy of the Legal heir
    • Legal Heir Certificate
    • Affidavit in the presence of Notary Public
  5. Submit the request and you will get an acknowledgement
  6. E-filing administrator will verify the documents and approve/reject the request
  7. Once request gets approved, you can file return as a legal heir. Go to e-file and file deceased person’s income tax return.

Though the legal heir is responsible for paying taxes on behalf of deceased person, s/he is not personally held liable for it. Such tax liability is limited to the extent of assets inherited and legal heir is not required to discharge it out of her/his personal assets. In case of refunds, it is directly credited to the bank account mentioned in the income tax return. The bank account can be of legal heir or joint account with the deceased person. All other provisions of the law apply in the same manner for the deceased person.