If any of your closed ones departed recently, remember that it is a legal responsibility of the spouse, legal heirs or family members to file the IT Return on behalf of the deceased for that year. And ignorance of law was never an excuse.
However emotional or traumatic your life situation may be, the law is
unemotional and absolutely detached. Therefore, it makes all sense to
understand and follow the guidelines and procedure to submit the Income
Tax Returns in case of a deceased in your family.
Section 159
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.
Salient features of Section 159
1/ The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
2/ 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.
3/ Any proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative.
4/ The tax must be payable from 1st April to death of the taxpayer.
5/ There is no different process to file the return of a deceased taxpayer. It is the same as you use to file your own IT returns - either through online or through offline mode.
6/ Legal heir is not responsible to pay the income tax dues from his or her own pocket. But he / she is liable to pay the dues on behalf of the deceased income or assets.
7/ The legal heirs are liable up to the extent of the assets that they inherit. Let us say Mr. X died with an asset worth Rs.1,00,000 in favour of the legal heir. However, the total tax liability of Mr. X for that financial year 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.
8/ If there is any refund due to the taxpayer, then such refund will be credited to the bank account of an income tax payee.
Documentation that you would need to file the IT return on behalf of the deceased IT Payee
1/ Get a Legal Heir Certificate
Before you can file IT Return on behalf of the deceased, you must first produce an evidence that you are actually a legal heir of the deceased. Therefore, you must get a legal heir certificate. According to a law, any of the following documents can be considered as valid Legal Heir Certificate:
a) Legal Heir Certificate issued by a court.
b) Legal Heir Certificate issued by local revenue authorities.
c) Surviving family member certificate issued by local revenue authorities.
d) The registered WILL.
e) The family pension certificate, issued by State/Central Govt.
2/ Calculate the Taxable Income of the Deceased
The procedure to be followed for calculating the taxable income (and the tax payable) of the deceased is exactly like any individual calculation. There is absolutely no change in this process. Therefore, for doing your calculations, you must collect all the relevant financial data of the deceased like his or her bank statements, Form 16 and Form 16A, Form 22AS, Investments done by the deceased during the financial year etc.
3) Get the notarized affidavit for filing IT return on behalf of a deceased
Documents required for filing IT Return on behalf of the deceased
Once you have collected all of the above documents, you must prepare yourself to file the IT Return by ensuring you have all of the following. In case you are filing online, scan all the below documents for uploading purpose.
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
Online Procedure to file IT Return on behalf of Deceased
The whole procedure is explained in the e – File portal. I am explaining a few key points here:
1/ Login to e-File portal and go to "My Account" to register yourself as a legal heir.
2/ Provide the necessary details and upload all the documents which are mentioned above.
3/ Once you SUBMIT your request, the request will be sent to an e-Filing Administrator. The e-Filing Administrator may approve or disapprove your request after going through the details.
4/ Based on the decision by the e-Filing Administrator, a notification will be sent to the registered email id of the legal heir.
5/ Based on documents submitted by you, the IT Department will allow you to file the IT return in either of the two categories.
a) As a Temporary Legal Heir
This category is usually awarded to those legal heirs who have failed to submit the legal heir certificate mentioned above. Such temporary legal heir can access the portal and upload the ITR/Forms, but are not allowed to access all other services like adding a CA to submit audit forms (other than ITR) on behalf of the deceased.
b) As a Permanent Legal Heir
This category is awarded to those who have submitted the valid legal heir documents. This person can file ITR/Forms or view status of submission. 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.
Summary
Overall, the process of collecting all required documents, and filing the IT Return on behalf of the deceased is not very simple. 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 keep your spouse or legal heirs informed about this important aspect of income tax returns.
Cheers
Manoj Arora
Official Website | My Mission
Life elevating books :
From the Rat Race to Financial Freedom | Happiness Unlimited | Dream On
Manoj Arora
Official Website | My Mission
Life elevating books :
From the Rat Race to Financial Freedom | Happiness Unlimited | Dream On
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