ITR Filing for a Deceased Taxpayer: Legal Heir Registration, Partial-Year Income, and Form Selection

 Death does not close books on a person’s tax liability. If a deceased person earned any taxable income in the financial year, then the income must be reported to the income tax department, and it is the responsibility of the legal heir. This is a compulsion of the Income Tax Act 1961. Ignorance of this can trigger notices, penalties, interest, etc.

This article gives importance to three things: first, registering themselves as a legal heir on the e-filing portal; second, finding out which income to report; and third, selecting the ITR form.

Steps to Register as a Legal Heir

Step 1: Register as a Legal Heir on the e-filing Portal

Before filing any return, a legal heir must register themselves on the e-filing portal as a “representative assessee”. That links the PAN of the legal heir with the PAN of the deceased.

HOW to register:

1. Log in to the e-filing portal using your own (the legal heir’s) credentials.
2. Go to Authorized Partners → Register as Representative Assessee.
3. Click “Let’s Get Started”, then “Create New Request”.
4. Under “Category of Assessee you want to represent”, select Deceased (Legal Heir).
5. Enter the deceased’s PAN, date of birth, and date of death.
6. Upload the required documents (see below).
7. The request goes to the e-Filing Administrator for approval.

Documents typically required:

• Death certificate (scanned copy)
• PAN card of the deceased
• PAN card of the legal heir
• Proof of legal heirship, any one of the following:
• Legal heir certificate issued by a court or local revenue authority
• Surviving family member certificate issued by a local revenue authority
• Registered will
• Family pension certificate issued by the state or central government
• A notarised affidavit (in front of a Magistrate or notary), where none of the above is readily available

Temporary vs Permanent Legal Heir: If you cannot immediately provide any legal document, the portal allows you to register as a temporary legal heir based on a notarized affidavit, but the portal only allows filing of a return – nothing more. Once you upload a certificate and after verification, the status is updated as a permanent legal heir, then the portal allows you to do all work, like you can see all the previously filed returns, give replies to notices, etc.

Step 2: Determine What Income Actually Goes Into the Return

The return for the deceased covers income only from the start of the financial year up to the date of death – not the full year.

What about income earned after the date of death?

Any income generated by the deceased’s assets after death – rent from a property, dividends, capital gains, etc. This income is not clubbed into the deceased return. It is reported in the legal heir’s own personal return for the period after the date of death.

So basically, two separate income streams may need to be reported:

• Deceased’s Return: From 1 April to the date of death.
• Legal heir’s own return: His personal income of the full year plus the income of deceased persons, which was generated after the death.

 Other points to keep in mind:

• If there is a refund due, then it is paid out to the legal heir.
• Liability is capped. Under Section 159 of the Income-tax Act, the legal heir’s liability for the deceased’s unpaid tax, penalty, or interest is limited strictly to the value of assets inherited from the deceased, not the heir’s personal wealth. If the inherited assets are worth ₹5 lakh and the deceased’s tax dues are ₹7.5 lakh, the heir cannot be made to pay more than ₹5 lakh.
• Assessment or reassessment procedure also can be done against a legal heir even after the death of the deceased person, but the same cap as above also applies.

Step 3: Choosing the Right ITR Form

The form depends upon the nature of the income that the deceased person earned before his death. Therefore, there is no change in rules for filing a form for a deceased person.

Conclusion

Hence, it’s important to comply with the provisions to avoid unnecessary tax consequences. As compliance won’t stop even after the death of a person, one should be very careful while filing taxes.