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Find out tax liability of Legal Heir
Did you know that deceased people can also be taxed? As ironic as it sounds, the income tax returns for a deceased person has 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 for filing 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.
CBDT has issued a circular on 9th Sep 21 extending the timelines for certain direct tax compliances for AY 2021-22.
1. ITR Filing due date extension:
i) ITR filing by taxpayers not covered under audit is extended from 30th Sep 21 to 31st Dec 21
ii) ITR filing for Tax audit cases is extended to 15th Feb 22
iii) ITR filing for transfer Pricing is extended to 28th feb 22
iv) ITR filing of Belated or Revised Return for FY 20-21 is extended from 31st Dec 21 to 31st March 22
2. Furnishing Audit Report:
i) Due date to furnish the audit report is extended to 15th Jan 22
ii) Due date to furnish the audit report for transfer pricing cases is extended to 31st Jan 22
Legal heir, in the eyes of law, is the person who represents the assets of deceased. To register as legal heir, any of the following documents are accepted as legal heir certificates:
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 e-filing of return 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 PAN is not registered, then the legal heir can register on behalf of the deceased. Following are the steps for the registration of Legal heir:
Step 1 – Go to income tax department efiling portal.
Step 2 – Login to e-filing portal using legal heir credentials
Step 3 – Go to My Account and register as Representative.
Step 4 –
Step 5 – Fill the following details in the page appeared :
The Documents required are as follows:
The size of the zip file must not exceed 1 MB.
Click submit and you will get the Acknowledgement from the department with a transaction ID. Below are the screenshot of the income tax website of the above process explained.
After completing the above process, Legal Heir request is sent to the e-filing Administrator. The e-filing administrator will verify the request and approve /reject as applicable. Once the request is approved, one can use all services for the Legal heir and for the deceased.
Once the request for registration as legal heir is approved, you can file return as legal heir on behalf of deceased. Following is the process for filing the return:
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 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. Legal heir should include this income inherited from the deceased in his own income while filing own income tax return.
Neelima who has a rental income of Rs 30,000 per month and interest income of Rs 10,000 per month dies on 20th Sep 2017. Her legal heir needs to file the return on behalf of Neelima for the period 1st April 2017 to 20th Sep 2017.
The income to be included in the return of Neelima to be filed by legal heir would be :
|Income from House Property Rental Income (From 1st April 2017 to 20th Sep 2017)||Rs 1,70,000|
|Income from other Sources Interest Income (From 1st April 2017 to 20th Sep 2017)||Rs 56,667|
The income to be included in the return of legal heir for F.Y 2017-18 :
|Income from House Property Rental Income (From 20th Sep 2017 to 31st March 2018)||Rs 1,90,000|
|Income from other Sources Interest Income (From 20th Sep 2017 to 31st March 2018)||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. Standard deduction of 30% is allowed to both on the rental income.
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 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.
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 a 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.