Last Updated on August 29, 2024 by Kanakkupillai
The death of an assessee will not discharge his liability to pay tax on the income he earned during the financial year. There is also a requirement for proper tax planning in case of succession.
Who is a Legal Heir?
A legal heir is the person who represents the assets of the deceased person. This legal heir can also be understood as a legal representative. Section 159 of the Income Tax Act encompasses the liability of a legal representative of a deceased person.
For registering as a legal heir, the following documents shall be accepted as legal heir certificate:
- The certificate of the legal heir, which has been issued by the court of law
- The certificate of legal heir, which the Local Revenue Authorities have issued
- The certificate of the family members of the deceased person is issued by the local revenue authorities
- The deceased persons registered will
- The family pension certificate issued by the State or Central government and the most common certificate available is the certificate of surviving family members issued by the local revenue authorities (Municipality orNagarpalika). And this certificate is usually issued in the regional or the local language, due to which the legal heir is required to translate it into English or Hindi and shall also get it duly notarised.
Registering as a Legal Heir
Legal heirs should get themselves registered on the website of Income Tax as legal heirs. This is mandatory for e-filing the return. The PAN of the deceased person and the legal heir should be registered with the income tax e-filing portal. And if the PAN of a deceased person is not registered on Income Tax, then the legal heir can register the same on his behalf. The steps for registering the legal heir are as follows:
- Go to the Income Tax e-filing portal, ‘incometaxindiaefiling.gov.in’.
- Login to the e-filing portal using the legal heir’s credentials.
iii. Go to ‘My Account’ and register as a Representative.
- Select the request type ‘New Request’.
- Select the Add or Register as a representative, “Register yourself on behalf of another person”.
- Select the category to register as the Estate of the deceased.
vii. Fill in the details pertaining to Details of Estate of Deceased:
- PAN of the estate of Deceased
- Name of the Estate of Deceased
- Date of Registration of the Estate of Deceased Person in question.
viii. Fill in the details pertaining to Details of the Deceased:
- PAN of the Deceased
- Date of Death of Deceased
- Surname of the Deceased
- Middle Name of the Deceased
- First Name of the Deceased
Along with this, the following documents shall also be filed:
- Copy of Death Certificate.
- Deceased person’s PAN Card copy
- PAN card copies, which are self-attested, and also a Copy of the Legal heir
- Legal Heir Certificate.
Approval Process of Registration
Once the above stipulated process has been done with, the request of the legal heir shall be submitted with the e-filing administrator. And the e-filing administrator will verify the request and either reject or approve the same. Once this has been approved, the legal heir can use all the services for the deceased and the filing as legal heir.
Filing of ITR as Legal Heir
Once the request is approved by the administrator, the legal heir can file the ITR on behalf of the deceased and the following is the process which should be taken up by the legal heir:
Download the ITR Form based on its applicability to the deceased, fill out the ITR Form, and generate the XML File.
- Go to the Income tax website, ‘incometaxindiaefilling.gov.in’.
- Login to the e-filing portal using the legal heir’s credentials.
- Go to the e-file option and upload the return.
- Fill in the following details and select the XML File of ITR which has been prepared.
- Select the PAN of the deceased.
- Select the ITR Form Name to upload, i.e., ITR 1, 2, or such other form as may be applicable.
- Select the Assessment Year for which the ITR is being filed.
- Upload the XML File
- The legal heir can digitally sign the ITR of the deceased using his Digital Signature Certificate (DSC) and click submit.
Calculating the Income of the Deceased
The legal heir should file the ITR on behalf of the deceased person, and in this, the income which is earned by such person till the date of his death shall be included. The income earned by such deceased person from the start of the date of the year until the date of death and the tax payable on the same shall be computed in a manner that would have been computed if such deceased person had been alive.
For getting clarity with regard to the earning of the deceased assessee, the bank statements, and such other relevant documents belonging to him shall be verified or checked.
But it shall be noted that any income earned after the death of the assessee from the assets inherited by the legal heir shall be taxable in his hands. So, he shall include this income in his own taxable income while filing the ITR.
Tax Liability of the Legal Heir
The legal heir is responsible for paying taxes on the taxable income of the deceased person, as declared in the ITR. But he shall not be held personally liable for the same and shall be limited to the extent to which the assets he inherited are capable of meeting the liability.
Say, Mr. An inherited INR 5 Lakhs from his mother on her death. But during the year the tax liability of mother was INR 6 Lakhs. Then the liability of Mr. A to pay his mother’s tax shall be limited to INR 5 Lakhs only.
Tax Liability in case of Penalty or Demand
The legal heir of a deceased person or assessee shall be held liable not just for the payment of taxes but also for the payment of the fine, penalty interest or such other amounts which shall be levied on the deceased person if he was alive. So, any penalty proceedings for default committed by a deceased person shall be initiated in the name of the legal heir, but the liability of the legal heir shall be limited to the extent of assets he has inherited from the deceased.
