We all know the rules and regulations about filing IT Return when we are alive. However, many of us don’t know what the Income Tax rule states in case the death of the taxpayer. It is common that after the death of the taxpayer, his/her spouse, legal heirs or family members never filed an IT return. But it is the responsibility of spouse, legal heirs or family members to file the IT Return!!!
You never found any advertisement or publication about this from IT Department too. However, there is a section in Income Tax that specifically mentions the rules about this situation. The whole details are available in section 159 of the Income Tax Act, 1961 (Act). According to section 159 of the Income Tax Act, 1961 (Act), if a person dies, then his legal representatives shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the similar manner and to the same extent as the deceased.
Points to remember–
- The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
- Any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
- Any proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative; and
- All the provisions of this Act shall apply accordingly.
- The tax must be payable from 1st April to death of the taxpayer.
- There is no different process to file the return of a deceased taxpayer. It is same as you used to file IT return either through online or through offline.
- Legal heir is not responsible to pay the income tax dues from his own pocket. But he is liable to pay the dues on behalf of the deceased income or assets. The legal heirs are liable up to the extent of the assets that they inherit. Let us say Mr.X died with an asset as an FD worth Rs.1, 00,000. However, his tax liability is Rs.1, 50,000. In that case, his legal heirs are responsible to pay only Rs.1, 00,000 but not for the remaining dues of Rs.50, 000.
- If there is any refund due to the taxpayer, then such refund will be credited to the bank account of an income tax payee.
How to file the IT return on behalf of the deceased IT Payee?
1) The first step is to get the Legal Heir Certificate. According to a law below documents, are considered as valid.
- Legal Heir Certificate issued by a court.
- Legal Heir Certificate issued by local revenue authorities.
- Surviving family member certificate issued by local revenue authorities.
- The registered WILL.
- The family pension certificate, issued by State/Central Govt.
2) Calculate the income of the deceased (exactly like an individual calculation and there is no change in this process). Before proceeding further, collect the below details as a proof.
- Collect all bank statements of a deceased IT payer.
- Collect Form 16 and 16a.
- This collection of bank statements and the Form 16 or 16A makes sure to tally the income.
3) Get the notarized affidavit for filing IT return on behalf of a deceased.
So documents required for filing IT Return on behalf of the deceased are as below.
- a) Copy of Death Certificate
- b) PAN Card copy of deceased
- c) PAN Card of the legal heir (with self-attested)
- d) Legal Heir Certificate
- e) Notarized affidavit
Scan all above documents for uploading purpose.
4) Get the Digital signature Certificate (DSC) of legal heir. The list of such DSC providers is available HERE.
5) Once you completed above steps then you have to file IT Return. There are two types to file. One is online and another is offline. I will explain the both.
The whole procedure is explained in the e – File portal. The same I am explaining below.
- Login to e-File portal and go to my account to register yourself as a legal heir.
- Provide the necessary details and upload the documents which I mentioned above.
- Click on SUBMIT tab. The request will be sent to e-Filing Administrator.
- e-Filing Administrator approve or disapprove after going through the details.
- Notification will be sent to the registered email id of the legal heir.
- Based on documents submitted IT Department allow you to file the IT return into two categories. One is a temporary legal heir. Because legal heirs failed to submit the legal heir certificate mentioned above. Such temporary legal heir can access the portal and upload the ITR/Forms, but unable to access all other services like add CA to submit audit forms (other than ITR) on behalf of the deceased.
- The permanent legal heir (the one who submitted the valid legal heir documents) can file ITR/Forms or view status. He can use the portal exactly like an individual taxpayer. He can view Status of Income Tax Return/Forms, ITR-V Acknowledgment and other filing status of e-Filed, Returns/Forms in respect of the deceased or can also view the status of the request under My Request List menu, post Login.
- Once, after approval of the application by e-Filing Administrator, legal heir can file IT return on behalf of deceased using legal heir login.
- The legal heir should add his PAN Card in the verification part of IT form, validate, and generate xml of the return.
The legal heir must visit the concerned assessing officer (AO). Submit the documents, which I explained above. After verification, AO will approve to file the IT return. Once the legal heir gets the approval, then he can file the return on his own or can take the help of tax experts. The name should be mentioned as “late (name of deceased) through legal heir (name of the person filing)”.
Overall, the process is not so simple. Because once the taxpayer dies, then dependents must collect all documents listed above. After that, they must take an initiative to file the IT Return. Hence, it is best to advise your spouse or legal heirs about this important aspect of income tax.