How to File Income Tax Return as Representative Assessee?

The term “assessee” is defined under the Income Tax Act of 1961 as a very important concept, as it identifies the entity liable for tax payments and related obligations. This legislation governs the taxation framework for individuals, corporations, and various entities within India, with the classification of an assessee influencing their tax liabilities, exemptions, and compliance duties.

An assessee refers to any person or legal entity obligated to pay taxes, receive refunds, or have tax assessments carried out according to the Act. In this respect, the individuals, Hindu Undivided Families (HUFs), companies, partnerships, associations and others are also brought under this head.

Any person liable for paying taxes or any other pecuniary liability which is conferred upon by this Act is defined in Section 2(7) of the Income Tax Act, 1961. Thus, the said term also includes an assessee evaluated for income, losses, refund, and every other kind of tax liability.

Who is a Representative Assessee?

A Representative Assessee is one person who, as required by the Income Tax Act 1961, legally undertakes the responsibility of meeting tax liabilities on behalf of some other person or entity. The system ensures that tax liability does not go unpaid even when the main tax debtor cannot directly make the payments.

This role typically entails acting for the non-residents, minors, mentally disabled or beneficiaries of trusts. The responsibilities of a Representative Assessee arise from his legal or financial relationship with the actual taxpayer.

As provided in Sections 160 to 165 of the Income Tax Act, a Representative Assessee has to perform all the tax-related functions, including submitting tax returns and paying taxes. However, his liability is restricted to the income he deals with on behalf of the actual taxpayer.

So, when and how is a Representative Assessee appointed?

A Representative Assessee is appointed if a person has a legal liability to attend to tax matters on behalf of another person or entity who cannot address the tax matter themselves. It can be used for the collection of taxes from nonresidents’ income, as well as for minors or incapacitated persons incapable of paying for themselves.

The concept of “Representative Assessee” is explained in Sections 160 to 165 of the Income Tax Act of 1961. It pertains to the situation when a person or organisation administers income on behalf of another party and incurs tax obligations, such as submitting returns, making tax remittances and responding to tax assessments.

A Representative Assessee is appointed if the actual taxpayer is incapable of conducting his or her tax compliance without assistance. The law ensures that income earned by non-residents, minors, trusts, estates, or those who lack legal capacity is properly taxed. A representative assessee is responsible for tax obligations but is only answerable for the income they control on behalf of the actual taxpayer.

Cases that require an appointment of a Representative Assessee are as follows:

1. Nonresidents under Section 160(1)(i) assign a Representative Assessee to a nonresident individual or entity so as to monitor their income in India. A foreign corporation may be required to pay royalties or fees in India, and a nominated representative is assigned on behalf of the corporation in order to adhere to tax laws.
2. Guardian or Manager of a minor, mentally ill person, or person of unsound mind, who is a Representative Assessee under Section 160(1)(ii). Representative Assesses are appointed for minors, mentally disordered, and those considered incapacitated under the law. For example, a father managing the rental income of his child is a representative assessee.
3. Trustees of Trusts (Section 160(1)(iv)) – Whenever income is produced by a trust, the trustees become Representative Assessees for the beneficiaries. For private trusts receiving rental or corporate income, the trustee has the duty to file tax returns on behalf of the beneficiaries.
4. Courts for Wards, Administrators, and Official Trustees under Section 160(1)(iii) – In the case of a court of wards, administrator-general, or official trustee, he manages the property of an assessee and is his representative assessee. Under court administration, an official appointed is liable to pay taxes on the income of the estate.
5. Executors of Deceased Persons’ Estates under Section 160(1)(v) – Where a deceased person has income liable to tax, the executor or such other legal representative shall administer this until the estate is settled. For example, when, upon death, an individual has tax arrears, then the executor is required to file and settle returns before distributing the assets from the estate to the beneficiaries.
6. Section 163 deals with agents of non-residents – The Income Tax Department can appoint any agency, business partner, or individual in India to administer a non-resident’s income as his Representative Assessee. For instance, the branch manager of a foreign corporation operating in India may be appointed as the tax representative for that company.

File Income Tax Return As A Representative Assessee

In the case of a Representative Assessee, to file an Income Tax Return, one has to make an application for authorisation, is required to get registered with the e-filing platform, forms need to be chosen suitably as relevant, and all the income and deductions have to be correctly reported. Through this procedure, persons who cannot file their returns themselves because of being dead, or underage, or non-residents, or beneficiaries of trusts get taxed in accordance with the tax law. By following the proper procedures, a Representative Assessee can fulfil their legal obligations while ensuring smooth tax compliance for the original assessee.

Important Points to note:

1. Acting as a Representative Assessee does not vest ownership; your role is merely to ensure tax compliance, not to manage income or assets.
2. Proper authority is essential. Carry legal documents, such as a will, trust deed, or power of attorney, to prove your position.
3. Accurate reporting is essential to avoid penalties and reassessments by the Income Tax Department.
4. Ensure your return is filed at the deadline. July 31 for individuals and September 30 for businesses.

Step 1: Evaluation of Qualification as Representative Assessee

To seek Representative Assessee status, you should meet the statutory requirements prior to lodging the tax return. Representatives can be guardians or legal heirs acting on behalf of minors, persons suffering from mental incapacities, or deceased persons. Trustees or executors managing income from estates or trusts, court-appointed administrators managing property tax matters, and agents representing non-residents earning income in India fall under this category as well.

Step 2: Secure Authorisation and Required Documentation

In order to file taxes on behalf of another individual or entity, it is essential to possess the appropriate authorisation and documentation. This would include legal documents like a will, power of attorney, court order, or trust deed that authenticate your authority to act as a representative; PAN for the original taxpayer and the representative; complete income details, including salary, rental income, business income, investments, and foreign income, if applicable; and tax deductions by verifying bank statements and Form 26AS, the tax credit statement.

Step 3: Register as a Representative Assessee on the Income Tax Portal

To submit the return, first, you must get registered as a Representative Assessee on the Income Tax e-Filing Portal: https://www.incometax.gov.in/iec/foportal/

1. Access the e-Filing Portal by clicking using your PAN and password. • You may have to register for an account on the portal if you do not have one.
2. Go to ‘My Account’ and click on ‘Add/Register as Representative’. Proceed as instructed for ‘Authorised Representative’. Click ‘Register as Representative’.
3. Identify the category of assessee you represent: deceased, minor, mentally incapacitated, non-resident, or trust/estate executor.
4. Enter the Assessee Details. Give the PAN of the person whom you are representing. Attach all relevant documents that support (for example death certificate, guardianship certificate, power of attorney).
5. Submit your Request and await approval. The request will be sent to the Income Tax Department for verification. After approval, you can file returns as the authorized representative.

Step 4: Prepare and File the Income Tax Return (ITR)

After registering as a Representative Assessee, follow these steps to file the ITR:

1. The right ITR form, according to the type of income and the status of the original assessee, must be selected. ITR-1 is used for salaried persons, pensioners, and those earning rental income. ITR-2 should be utilised in case of persons with capital gains, foreign income, or any number of incomes. ITR-3 should be utilised by an individual and HUF having business/professional income. A return of trust, estate, or legal representative of a deceased having two or more recipients of income shall use the ITR-5.
2. While filling the return, add PAN and name of the original assessee (taxpayer). Now, add PAN and name as Representative Assessee. The ‘Filing Status’ shows that this is a return that is being filed as a Representative Assessee.
3. Accurately report the income. Enumerate all income sources, including salaries, business profits, capital gains, rental income, and dividends. Ensure that tax deductions (e.g., Section 80C, 80D) and TDS (Tax Deducted at Source) information correspond with Form 26AS.
4. Calculate Tax Liability and Claim Deductions. • Use an online tax calculator or calculate manually to arrive at the total tax liability. • Apply exemptions and deductions, if any, available to the assessee.
5. Check all entries entered and submit the ITR online through the e-Filing Portal. The return then gets e-verified either via one of the options available in view or by requesting a physical ITR-V signed to be mailed from CPC at Bengaluru.

Step 5: Pay all dues taxes, if any

Use Challan 280 on the tax portal to clear all arrears of taxes before filing the return. Keep a copy of your tax-paid receipt for reference.

Step 6: Follow the status of your return and reply to any notices

Log in to the portal to check the status of filed returns on the ‘View Filed Returns’ page. If any notice or requisition is sent by the Income Tax Department, respond as a Representative Assessee.

Conclusion

Filing an Income Tax Return as a Representative Assessee is an important responsibility to ensure tax compliance for those who cannot file their own returns. The process involves getting the proper authorisation, registering on the Income Tax e-Filing portal, selecting the appropriate ITR form, and accurately reporting income and deductions. All that a Representative Assessee can do with strict observance of legal obligations, with full transparency and precision, is ensure that the submission is filed in time and is indeed furnished properly for processing. In this manner, the Representative Assessee himself carries out an important role by being part of the tax compliance process and by ensuring financial and legal rights are preserved for the original taxpayer.