How To File Tax Returns For A Deceased Person ?

Death is only natural—this is how the world has been going on since time immemorial. After a while, you must learn to overcome grief and look after the worldly affairs.

It is important to obtain a death certificate from the doctor. Next, you need to check other matters like inheritance and dues. It is also mandatory to pay off the taxes of the deceased.

Legal heirs must register and file tax returns following certain steps. The first step is to obtain the death certificate. Following this, a certificate of surviving heirs is needed. All the surviving heirs must authorise one legal heir to file the income tax return of the deceased person. All income details and expense details are needed to help prepare the details needed for the income tax return form.

If these are ready, the sole legal heir or the authorised legal heir needs to apply and register as legal heir on the income tax website. The heir should file the tax returns after completion of registration.

Related: Filing Income Tax returns - common mistakes

How To File An Income Tax Return (India) For a Deceased Person

Why is it needed at all? Especially for NRIs, you may need to file tax returns for the deceased in other countries as his/her legal heir. In that case, you need to file income tax in India as well.

The following documents are needed to prove that a person is the legal heir:

• Copy of the death certificate of the deceased (mandatory)
• Copy of the PAN card of the deceased (mandatory)
• Self-attested PAN card copy (mandatory)
• Legal heir certificate (any one or more documents will be accepted as the legal heir certificate)
• The legal heir certificate provided by a court of law
• The legal heir certificate furnished by local revenue authorities
• The registered will of the deceased
• The certificate of surviving family members furnished by local revenue authorities
• The family pension certificate provided by the state/central government

Other legal heirs must authorise one person among them to file the income tax return of the deceased unless there is only one legal heir.

How To Register As A Legal Heir On The E-filing Portal?

Step 1: Login to your account on the income tax e-filing site.

Step 2: Go to ‘My Account’ and select register as representative.

Step 3: In the next page, you will need to choose Request Type as ‘New Request’, Add/Register as the representative heir by selecting ‘Register yourself on behalf of another person’, and then, choose Category as ‘Legal Heir’.

Step 4: After this, you will need to enter the details as below:

• PAN of the deceased
• Date of death
• Surname of the deceased as per the PAN card
• Middle name of the deceased as per the PAN card
• First name of the deceased as per the PAN card

Step 5: Next, select the documents:

• Copy of the PAN card of the deceased
• Copy of the death certificate
• Copy of the PAN card of the legal heir
• Legal Heir certificate and, if needed, a copy of the letter from the bank stating the nominees along with their PAN cards. It must also state that the nominees remain nominated as on the day of the death of the deceased. The letter should have the official signature and seal of the bank. Affidavits are not permitted in place of any of these documents. These should be uploaded as a zip file of maximum 1 MB in size.

When you upload all these documents, it’s time to click the submit button. The application needs approval from the income tax department. Once the application is approved, you can file the income tax return for the deceased as his/her legal heir.

Steps To File An Income Tax Return For The Deceased

Fill up all the applicable fields of the income tax return form:

1. Salary income

2. Saving bank interest

3. PPF and other PF, if any

4. Gratuity

5. Interest income

6. Capital gains

7. Rent

8. Any other income

For capital gains, each one must be calculated separately from the date of purchase to the date of sale or redemption.

Arrive at the total income and then apply for the exemptions—e.g. insurance, home loan repayments, medical insurance, etc.

Next, compute the taxable income. You will then be able to calculate the total tax payable. Use Form 26AS to check the tax deducted and advance tax paid. Pay the balance tax due.

When the income tax department approves your registration as legal heir, you can upload the income tax return form and complete the formalities by using e-verification or digital signature. You can also sign and send ITR-V to the Central Processing Centre, Bangalore.

Related: Penalties under the Income Tax Act

Important Points To Note:

The legal heir is liable for certain items:

1. Total tax payable cannot exceed the amount or value inherited from the deceased person.

2. In case of failure to file tax returns or make tax payments on behalf of the deceased person, the legal heir can be prosecuted in the same way as the deceased person would have been prosecuted.

3. Capital gains tax should be computed for each capital transaction and indexation applied where it is beneficial to the legal heir.

4. In case of death of the HUF Karta, the HUF continues to exist. The senior most member of the HUF becomes the new Karta, who becomes responsible for making tax payments and filing returns.

5. If the legal heirs cannot agree on a representative to file taxes, they can jointly pay taxes and file returns as a body of individuals or an association of persons. In the case of any penalty, they are jointly responsible for paying it. In the case of prosecution, they will be jointly prosecuted.

6. Returns do not need to be filed if the total income is below Rs 200000, the total bank interest income is below Rs 10,000, and no asset or income is received from outside India. It is better to file the income tax return for the deceased to show how inheritance is received and avoid suspicion of income/asset mismatch against the declared income of legal heirs.

Related: How to claim tax benefits under Section 54F

Tailpiece

It is never pleasant to deal with all the tasks after the death of a loved one. Nevertheless, you must perform certain tasks to pay off the income tax of the deceased. It’s your duty to the dead as his/her legal heir. Here is a quick rundown on the essential points:

1. Collect the death certificate and income details of the deceased

2. Apply for the legal heir documents

3. Register a legal heir on the income tax e-filing website

4. Prepare the tax computation and pay off due taxes

5. Prepare the tax audit, if needed

6. Add the CA for filing the tax return

7. File the tax return and verify using e-verification, digital signature, or ITR-V.

8. Wait for the assessment to complete

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