Tax Return for a Deceased Person

It is not unusual if somebody files tax return on behalf of himself or his family member. However, we have come across situations where people are misguided regarding the fact that tax returns for a deceased member are not required to be filed.Families are usually under emotional distress for sometime following the death of a near one and can hardly think of anything else but to revive their lifestyle.

So,on inquiry by few of our friends and clients, we would like to share that a deceased person might stop existing physically but his investments earnings and income for the last financial year is still tagged to his name till the attached will/ estate distribution takes place. So, as per the rules under IT act, tax returns for a deceased person needs to be filed like any other ordinary man. Today, we will discuss in short about the basic outline of this process.

How is the income calculated for deceased person?

For the previous year the total income is divided in two sections:

a) beginning of previous year (i.e. From 1^st April) till the date of death.

b) from the date of death till the end of previous year (up to 31^st Mar).

Who is liable to file tax return for deceased person?

As per section 159 of IT Act 1961, a legal representative of the deceased is responsible for filing tax return. Usually, the spouse or any close relative of the deceased takes charge as the legal representative. In case of will, of the taxpayer who has passed away, the executor or any one mentioned in the will is held responsible. In case of multiple legal heir (in case of more than 1 child) it is always preferred to get a written agreement between all regarding the tax return filing.The IT act mentions the list of documents to be filed for legal heir is as follows:

https://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF/Register_Legal_Heir.pdf

Who is liable for tax liability of deceased person?

Although, the legal representative / heir makes the required return payment, he is not responsible for liability clearance from his own funds until the assets are actually distributed. He can claim the amount in case of penalties or any other advance tax payments made from the estate of the deceased. If the executor is responsible for making the required tax return, he can claim the amount from the estate income. 

Accordingly, in case of any refund cheque received, it is to be deposited in joint account held with the deceased person. If there is no such account, then the registered bank account's nominee needs to present Succession certificate, death certificate etc to court.

In case of further queries, we would request you to contact us at saarthifp@gmail.com to get a personalized response to your particular situation.