Filing income tax returns is essential for all Indian taxpayers, including those who have passed away. When a taxpayer dies, the legal representative takes on the responsibility of fulfilling their tax obligations. Understanding the intricacies of this process is crucial, including the timing, the role of the legal representative, and the transfer of property.
Filing Income Tax for the Deceased
If a taxpayer’s income exceeds the basic exemption limit, their income tax return must be filed, even after their death. The legal representative of the deceased must ensure compliance with tax regulations and manage the deceased’s financial affairs.
Income Thresholds for Mandatory Filing
- Individuals below 60 years: Income exceeds Rs. 2.5 lakh
- Individuals between 60 and 80 years: Income exceeds Rs. 3 lakh
- Super senior citizens above 80 years: Income exceeds Rs. 5 lakh
Role of the Legal Heir
The legal heir must register on the income tax website to file the return for the deceased. This step ensures compliance with tax laws and facilitates the transfer of assets. However, the legal heir’s tax liability is limited to the value of the inherited assets.
Claiming Deductions and Exemptions
The deceased taxpayer retains the right to claim all deductions and exemptions for the entire fiscal year in which they passed away. Taxable income generated up to the time of death is subject to taxation.
Income from Investments After Death
Any earnings from investments after the taxpayer’s death are considered the income of the legal heirs and are taxed according to their tax brackets.
Legal Heir’s Tax Obligations
The legal heir must pay the taxes associated with the deceased person’s income tax return. Their responsibility is confined to the value of the inherited assets, meaning they are not personally liable beyond this amount.
Steps to Register a Legal Heir
- Log in: Go to the income tax department e-filing portal and log in with your user ID and password.
- Register as Representative: Scroll to ‘Authorised Partners’ > ‘Register as Representative’ and click ‘Let’s Get Started’.
- Create New Request: Click ‘Create New Request’.
- Enter Details: Select the category, enter PAN details, date of death, and reason for registration.
- Upload Documents: Upload the required documents.
- Verify and Submit: Click ‘Proceed’ and ‘Verify the Request’. Then, click ‘Submit Request’ to get an acknowledgment from the department.
Required Documents
- Death Certificate
- PAN Card of the deceased
- Self-attested PAN card copy of the legal heir
- Legal Heir Certificate
- Applicable orders passed in the name of the deceased
Handling the tax obligations of a deceased loved one can be complex, but following these steps ensures compliance with Indian tax laws and proper management of the deceased’s financial affairs.
