ITR News: Tax obligations do not end with death; here is how to file an ITR for a deceased person.

Income Tax Return Tips: Failure to file an ITR for a deceased family member could lead to the freezing of assets. Find out who qualifies as a 'legal representative' and what their responsibilities entail.

ITR after Death: The death of a taxpayer does not extinguish their income tax liabilities. Under the Income Tax Act, the responsibility for filing the Income Tax Return (ITR) and settling any outstanding taxes shifts to the deceased person's legal representative. Non-compliance can result in notices, penalties, and complications regarding the settlement of the estate. As the ITR filing season approaches, families should ensure that the tax affairs of deceased relatives are addressed in a timely manner.

Who can file the ITR of a deceased taxpayer?

Section 302 of the Income Tax Act (corresponding to Section 159 of the earlier law) places the responsibility for tax compliance on the legal representative of the deceased. A legal representative may include a spouse, adult child, parent, an executor named in the will, an administrator of the estate, or a guardian acting on behalf of a minor legal heir. If the deceased left a valid will, the executor is responsible for filing the return and settling tax liabilities from the estate before the assets are distributed among the beneficiaries. In cases where the deceased died intestate (without a will), legal heirs such as the spouse, children, or parents may assume this responsibility under applicable succession laws.

How to register as a legal representative

A legal heir cannot directly access the deceased person's income tax account; registration as a 'Representative Assessee' is mandatory. To initiate the process, the legal representative must log in to their account on the income tax e-filing portal and submit an application under the "Authorised Partners" section. The application requires the following documents...

PAN of the deceased taxpayer
Death certificate

Proof of legal heirship or authority to represent the estate

Once approved by the Income Tax Department, the representative can access the deceased taxpayer's account via their own login and initiate the return filing process. The income reported in the ITR must include all income earned by the deceased from the beginning of the financial year up to the date of death. This may include...

Salary, pension, and rental income
Interest income
Dividend income
Other taxable income

Income generated after the taxpayer's death is treated separately. If an executor has been appointed via a will, the executor must continue filing returns until the estate is distributed. In the absence of a will, income from the inherited estate becomes taxable in the hands of the legal heirs and must be reported under their respective PANs.

Consequences of non-compliance

If returns are not filed, the tax department may issue notices and initiate assessment proceedings. Legal representatives may also face late filing fees, interest charges, and other penalties applicable under tax laws. Provisions regarding interest may apply in cases where taxes remain unpaid.

For instance, interest under Sections 234B and 234C may be levied if advance tax obligations are not met. These provisions typically impose interest at the rate of 1% per month on the tax shortfall. However, the liability of legal heirs is limited to the value of the assets inherited from the deceased's estate.

Potential loss of refunds

Failure to file the deceased taxpayer's return can also result in the loss of eligible tax refunds. Any pending refund claim may become unavailable if the deadline for filing a belated return is missed. Early planning can prevent issues; tax experts advise identifying the legal representative, gathering necessary documents, and completing the registration process on the income tax portal well before the filing deadline approaches. Timely action can help families avoid penalties, notices, and delays in property settlement.