Income tax

Key things to know before filing an Itr for the deceased

Death and taxes are inevitable. It is strange but true that any person’s liability to tax remains even after death, so an income tax return (ITR) must be filed.

Any tax incurred on income received by the family on behalf of the deceased must be paid if it exceeds the basic exemption ceiling. The legal heir must file ITR here on behalf of the deceased.

Now consider another situation. When the deceased received salary income before his death and accrued interest income after that, is it still mandatory to produce an ITR?

“Yes,” says Naveen Wadhwa, Deputy Managing Director (DGM) at Taxmann.

The requirement to file an ITR here would be as follows:

a) Income accumulated before the death of a person: the ITR must be deposited in the name of the deceased under his PAN by the legal representative.

b) Income accrued after death: If the deceased had prepared the will before death, the executor would have been required to produce the ITR before the distribution. After that, the legal representatives must file the declaration in their personal capacity.

If the deceased did not prepare a will before his death, the legal heirs are required to file an ITR in their personal capacity. Thus, interest income will be added to the income of legal representatives or legal heirs, as the case may be.

Now, what if the deceased did not write his will before he died and the partition has not yet taken place. In whose hands will this income be taxed?

Well, in such a case, the estate immediately reverts to the legal heirs under the personal law that governed the deceased, says Wadhwa.

“In such a case, any income accrued or received by the deceased person from the date of death until the last day of the financial year will be considered income of the legal heir and disclosed in the tax return,” adds Wadhva.

And, can a legal heir file the deceased assessee’s statement if a Digital Signature Certificate (DSC) is required?

Yes, a legal heir can file a return on behalf of the deceased assessee even though the DSC is mandatory. Wadhwa explains that the legal heir must obtain the DSC in his capacity of filing such a declaration.

To file the return on behalf of the deceased, a person must first register as the legal heir on the Indian Income Tax Return website and enter the name, PAN and date of death of the deceased.

In addition, he is required to upload the scanned copy of the following documents in a zip file: a copy of the deceased’s PAN card, a copy of the death certificate and a copy of the proof of legal heir according to the standards.

The tax department will verify the application and, once the application is approved, the legal heir can perform all services related to electronic filing on behalf of the deceased.