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How to File Income Tax Return for the Deceased by the Legal Heir

Updated on: Jun 5th, 2024

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12 min read

Did you know that deceased people can also be taxed? As ironic as it sounds, the income tax returns for a deceased person have 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 to file 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.

Who is a legal heir?

From the viewpoint of the law, a legal heir is a person who represents the deceased's assets. Any of the following documents are acceptable as legal heir certificates when registering as a legal heir:

  • The certificate of legal heirship is issued by a court of law.
  • The certificate of legal heirship is issued by the local revenue authority.
  • The certificate is issued by the local revenue officials to the remaining family members.
  • The deceased person's registered Will.
  • The State/Central government's family pension certificate.
  • The certificate of surviving family members issued by the local revenue authorities (Municipality, Nagarpalika) is the most common certificate available. Because this certificate is typically issued in a regional language, the legal heir must translate it into English/Hindi and have it notarized.

Register as a 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 the e-filing of returns 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's PAN is not registered, then the legal heir can register on behalf of the deceased. Following are the steps for the registration of a legal heir: 

Step 1 – Go to the income tax department e-filing portal. Log in to the e-filing portal using your user ID and password.

Login to e-filling portal

Step 2 – Go to ‘Authorised Partners’ > ‘Register as Representative’ and click on ‘Let’s Get Started’.

Legal heir tax filing

Step 3 –   Click on ‘Create New Request’.

Register as representative assessee

Step 4– Select the category, enter the PAN details, date of death, and the reason for registration.

deceased legal heir

Step 5: Upload the required documents

details regarding the deceased when filing ITR

 

details required to be filed

Step 6– Click on the ‘Proceed’ and ‘Verify the Request’ button.

to file ITR

Step 7– Click on ‘Submit Request’, and you will get the acknowledgment from the department.

Note: The legal heir should mandatorily provide the ‘Reason for Registration’ as a representative assessee.

Documents required to file ITR on behalf of a deceased person

Copies of the following documents are required:

  • Death Certificate.
  • PAN Card of the deceased.
  • Self-attested PAN card copy of the legal heir.
  • Legal Heir Certificate (as described above).
  • The order is passed in the name of the deceased if applicable.

The size of the zip file must not exceed 5 MB.

Registration approval process

After completing the above process, the legal heir request is sent to the e-filing administrator. The e-filing administrator will verify the request and approve/reject it as applicable. Once the request is approved, one can use all services for the legal heir and for the deceased. 

If the request is rejected, the intimation for rejection would be received by a valid reason for such rejection. The reasons could be the upload of incorrect information or documents, etc. Accordingly, the legal heir should take the necessary action to rectify such rejection.

Once approved, you can access the deceased taxpayer's income tax e-filing account within your income tax login. You can change Logged in as from Self to As a Legal Heir or representative after which you can access all the information of the deceased taxpayer and file the ITR also.

File ITR as legal heir

Once the request for registration as a legal heir is approved, you can file a return as a legal heir on behalf of the deceased. ITR can be filled in the normal way and in the standard procedure which is followed by an individual person while filling his own return. 

Thus, the return would be e-verified using various methods, such as Aadhaar OTP, net banking, etc., or it can be verified by the legal heir who can sign the ITR Acknowledgement, and a copy of the same can be sent to Central Processing Centre (Bengaluru).

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 to 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. The legal heir should include this income inherited from the deceased in his own income while filing his/her own income tax return.

Tax calculation of the deceased with an example

Neelima, who has a rental income of Rs 30,000 per month and an interest income of Rs 10,000 per month, dies on 20th Sep 2023. Her legal heir needs to file the return on behalf of Neelima for the period 1st April 2021 to 20th Sep 2023.

The income to be included in the return of Neelima to be filed by the legal heir would be :

Income from House Property Rental Income (From 1st April 2023 to 20th Sep 2023)

Rs 1,70,000

Income from other Sources Interest Income (From 1st April 2023 to 20th Sep 2023)

Rs 56,667

The income to be included in the return of legal heir for F.Y 2023-24 :

Income from House Property Rental Income (From 20th Sep 2023 to 31st March 2024)

Rs 1,90,000

Income from other Sources Interest Income (From 20th Sep 2023 to 31st March 2024)

Rs 63,333

Property taxes can be claimed in the return of the deceased if he paid for them or of the legal heir if the legal heir paid them. A 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. The liability of the legal heir is limited to the extent to which the assets he inherited are capable of meeting the liability. 

For instance, if a person receives Rs 8 lakhs as his share from his father’s property and his father's tax liability is Rs 9.5 lakhs, then he cannot be made liable to pay more than Rs 8 lakhs. The liability of the legal heir shall be limited to the value of the assets inherited.

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. It means that the penalty proceedings for default by the deceased can also be initiated against the legal heir. However, his liability would be limited to the extent of the assets inherited from the deceased.

Frequently Asked Questions

Is it necessary to file the ITR of deceased individuals?

Yes, It is mandatory to file the ITR even of the deceased Individual if such Individual’s taxable total income exceeds Rs 2.5 lakhs or as per provision of Section 139(1). Legal Heir is responsible for filing such ITR as a representative of such legal heir.

How to file ITR of Deceased Individuals?

The legal Heir can file the ITR of the Deceased Individual, The Legal heir can provide supporting documents and register in the Income tax portal as a representative. This will allow you to file the ITR as a representative assessee.

How can the legal heir claim the TDS Credit, which is appearing in the Deceased Individual’s Form 26AS?

From the date of decease any income accruing to Deceased Individual is taxable in the hands of legal heir. Legal heir should intimate the bank of such change. However, in practice, all the procedures take time and any TDS on such income will continue to get deducted on such deceased individuals.

In such a case, the ITR form provides the option to transfer out the TDS credit from the Deceased individual to the legal Heir, and the Legal Heir can transfer the TDS credit on such income. Such transfers can be made in Schedule TDS.

An income tax notice was issued to the Deceased Individual, which went unnoticed by the Legal Heir and tax demand was levied on best judgement assessment u/s 144. Is the notice issued towards Deceased Individual is valid?

No, the Notice issued to deceased Individuals is invalid. However, is such notice was issued when the individual was alive such proceeding will continue in the name of legal heir as per provision of section 159.

Is the amount received as legal heir taxable?

No , Amount received as legal heir is not taxable.

What is legal heir certificate?

Legal heir certificate is a certificate which is issued by court of law which shown who is the legal heir of the deceased individual.

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Quick Summary

Deceased individuals can be taxed; their legal heir must file income tax returns on their behalf. The legal heir needs to register on the income tax website with required documents. After approval, the heir can access and file the deceased's tax return. The heir calculates income of deceased till death date and inherits any subsequent income. Tax liability of heir is limited to the assets received, with additional penalties under the legal heir's responsibility.

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