Income tax return of deceased person - A Complete guide
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Dealing with the passing of a loved one is undoubtedly challenging, and amidst the emotional turmoil, handling their financial matters can add to the stress. One such important aspect is filing the income tax return of a deceased person. In this guide, we’ll break down everything you need to know about this process in simple terms.
What Happens to Taxes When Someone Passes Away?
When an individual passes away, their legal heirs or representatives are responsible for managing their affairs, including their taxes. The income earned by the deceased up to the date of their passing is taxable.
Who Can File the Income Tax Return on Behalf of the Deceased?
The legal heirs or representatives of the deceased person are tasked with filing the income tax return on their behalf. This could be the spouse, children, or any other appointed executor of the deceased’s estate.
Income of deceased person
When a person passes away, their financial affairs don’t cease immediately. It’s essential to understand how income earned before and after the individual’s demise is treated for tax purposes. Here’s a detailed explanation:
Income Accrued or Received Before Demise: Any income earned by the deceased individual from the start of the financial year until the date of their passing is considered the income of the deceased person. This includes salaries, business profits, rental income, interest, dividends, or any other sources of income received during this period.
Tax Liability on Income from Inherited Assets: When assets are inherited from the deceased by the legal heir, any income generated from these assets afterward is taxable in the hands of the legal heir. This means that the legal heir is responsible for paying taxes on any income earned from the inherited assets.
Treatment of Inherited Income: Once the legal heir receives the inheritance, any income accrued or received from the inherited assets is treated as the legal heir’s own income. This income is subject to taxation based on the applicable tax laws and the legal heir’s tax status.
Tax Responsibility of the Legal Heir: As the recipient of the inherited assets and income, the legal heir assumes the tax liability associated with them. It’s crucial for the legal heir to accurately report and pay taxes on any income derived from the inherited assets to ensure compliance with tax regulations.
Income tax rates for Deceased person
Old tax RegimeÂ
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Documents required for Income tax return of deceased person
- PAN Card of the deceased.
- Death Certificate.
- Self-attested PAN card of the legal heir.
- The order is passed in the name of the deceased if applicable.
- Copy of Letter of Indemnity (optional)
- Legal Heir Proof of any one from below-Â
- Legal Heir Certificate issued by either a Court of Law or Local Revenue Authority.
- Surviving Family Member Certificate issued by the Local Revenue Authority.
- Family Pension Certificate issued by either the Central or State Government.
- Registered Will.
- Letter from a banking or financial institution on their official letterhead, bearing an official seal and signature, providing details of the nominee or joint account holder associated with the deceased’s account at the time of their demise.
Process of ITR filing by legal heir
To initiate the process of filing the Income Tax Return (ITR) on behalf of the deceased as a legal heir, the initial step is to register as the legal representative of the deceased individual on the income tax E-filing Portal. Follow the below steps to first register and then file the ITR of deceased person –
- Log on to ‘e-Filing’ Portal https://www.incometax.gov.in
- Go to ‘Authorised Partners’> Click ‘Register as Representative’
- Click on the ‘Lets Get Started’ to create a ‘New Request’
- Click on ‘Create New Request’
- A dialogue box would appear stating ‘Category of Assessee who you want to represent’. Select the option ‘Deceased (Legal Heir)’ from the drop-down.
- Fill in the details required
- Attach the necessary documents (Maximum file size allowed is 5MB)
- Click on ‘Proceed’ and ‘Verify the Request’
- Click ‘Submit Request’
- The e-Filing Admin verifies the request details and may approve or reject it.
- Upon approval or rejection, an email and SMS notification are sent to the legal heir.
- Rejection reasons may include incorrect information or documents, requiring necessary action for rectification.
- The approval/rejection process typically takes up to 15 days, but may be longer due to technical issues with the new IT portal.
- After registration, the legal heir can file the Income Tax Return (ITR) in the standard procedure followed by living individuals.
- The ITR is verified by the legal heir, who signs the ITR Acknowledgement and sends a copy to the Central Processing Centre (Bengaluru).
- Alternatively, the legal heir can e-verify the return using their own details and generating OTP.
- When providing Aadhaar details in the ITR, the Aadhaar of the deceased can be provided, and the legal representative’s Aadhaar can be provided in the “Aadhaar Number of the representative” section.
Conclusion
Filing the income tax return of a deceased person requires careful attention to detail and adherence to legal procedures. By following the steps outlined in this guide and seeking professional advice if needed, you can ensure compliance with tax laws and fulfill your responsibilities as a legal heir or representative.
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FAQ (Frequently asked Questions)
Who is responsible for filing the income tax return of a deceased person in India?
- The legal heirs or representatives of the deceased person are responsible for filing the income tax return on behalf of the deceased.
What documents are required to file the income tax return of deceased person?
- Documents required may include the deceased person’s PAN card, death certificate, legal heir certificate any one from surviving family member certificate, family pension certificate, registered will or any relevant banking or financial institution letters.
How can I register as a legal heir to file the income tax return of deceased person?
- To register as a legal heir, you need to submit the necessary documents to the income tax department through the e-filing portal. Once registered, you can file the income tax return on behalf of the deceased.
What happens to the income earned by the deceased person before their demise?
- All income earned by the deceased person from the beginning of the financial year until the date of their demise is considered the income of the deceased.
Who is liable to pay tax on income generated from assets inherited from the deceased?
- The legal heir who inherits assets from the deceased is responsible for paying taxes on any income generated from those assets.
How is the income tax return of deceased person filed?
- The income tax return of a deceased person is filed in the normal format and procedure followed by living individuals. The legal heir verifies and signs the return, which is then submitted to the Central Processing Centre (CPC) or e-verified using their own details.
What if the request to register as a legal heir is rejected?
- If the request to register as a legal heir is rejected, the reasons for rejection will be communicated along with the intimation. The taxpayer should take necessary actions to rectify the rejection, such as correcting information or providing additional documents.
How long does it take to receive approval or rejection after registering as a legal heir?
- The approval or rejection process typically takes up to 15 days, but it may take longer due to technical issues with the IT portal.
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