Every individual with a taxable income has to mandatorily file their income tax return (ITR) in India. As surprising as it may sound, income tax rules mandate ITR filing for even dead people with taxable income.
For instance, if a person with taxable income dies during an ongoing year, his/her ITR has to be filed by a legal heir for the income earned till the date of death.
Not many individuals may be aware of this rule but it is significant this year in the wake of Covid-19 pandemic, which has claimed over 1 lakh lives — many of whom were taxpaying citizens.
Since it is mandated by law, the legal heir or representative has to file the return on behalf of the deceased person. Here are the steps involved:
Registration as legal heir
The legal heir has to first register himself/herself at the income tax website for filing return on behalf of the deceased. It may be noted that a legal heir is legally defined as the person who inherits the assets of the deceased individual.
For registering as a legal heir on the income tax website, an individual has to submit documented proof. Below are some proofs accepted by the Income Tax Department as mentioned on its website:
1) Legal Heir Certificate issued by Court of Law /Local Revenue Authority.
2) Surviving family member certificate issued by the Local Revenue Authority.
3) Family Pension certificate issued by Central/State Government.
4) Registered will.
5) Letter issued by the banking or Financial Institution in their letterhead, with official seal and signature mentioning the particulars of nominee or joint account holder to the account of the deceased at the time demise.
How to register as legal heir
An individual has to register as a legal heir in order to pay ITR for a deceased taxpayer. It is worth mentioning that the PAN of both the deceased person and the legal heir should be registered in the Income Tax e-filing portal.
In case the deceased person’s PAN is not registered, the legal heir can register on behalf of the deceased. There are four broad steps to register as a legal heir and they are mentioned on the Income Tax Department’s website.
1) Log in to ‘e-Filing’ Portal
2) Go to the ‘My Account’ menu located at upper-left side of the page > Click 'Register as Representative
3) Select the ‘Request Type’ as ‘New Request’ and Select the ‘Category to Register’ as ‘Deceased (Legal Heir)’ > Click ‘Proceed’
4) A list of details has to be provided after the fourth step. You can check them here.
After filling out all the details, click submit. Your request to register as a legal heir is now complete. The request will be forwarded to the e-filing admin for approval. After checking authenticity, the department may approve or rejected the request. If it is accepted, an email and SMS will be sent to the individual who submitted the request.
Filing ITR for deceased person
After the registration request is approved by the Income Tax Department, an individual can file the income tax return on behalf of the deceased person as a legal heir.
Follow this step-by-step guide
1) Download the ITR form applicable to the deceased. Fill all the details and generate the XML file.
2) Proceed to the Income tax website
3) You have to then login to the income tax e-filing portal using the legal heir credentials
4) Then go to the e-filing tab to upload the return
Fill in details such as deceased’s PAN and the applicable ITR form. Select the assessment year and upload the XML file and click submit. It may be noted that a legal heir can digitally sign the ITR of the deceased person using his/her digital signature certificate.
How much tax needs to be paid?
While filing ITR for a deceased person, a legal heir has to determine the amount of income tax that needs to be paid. An individual has to file ITR on behalf of the deceased person till the date of death.
Therefore, the income has to be calculated from the start of the year till the date of death.
The process to pay the tax remains the same. It should also be noted that any income generated after the date of death from assets inherited is taxable in the hands of the legal heir.
The income generated by assets inherited can be included by the legal heir under his/her own income while filing ITR.
Also Read | ITR FY20: Simple ways to save income tax