After a person passes away, the family has to deal with grief, but other matters need to be sorted out. One of them is what happens regarding the income tax returns of the deceased.
“Yes, if the deceased assessee had taxable income during the financial year in which they expired, ITR must be filed,” says Deepak Kumar Jain, founder and CEO, TaxManager.in - the tax advisory and e-filing portal platform of Rising Advisory Services.
Who Is Supposed To File Tax
As per section 159 of the Income Tax Act, 1961, the legal representative or an executor named in the will or by a court-appointed administrator of the deceased person’s estate shall have to file an income tax return on behalf of the deceased person as a representative assessee.
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“If there are any refunds, the legal representative/executor/administrator must receive the same as part of the deceased person’s legal estate and will have to distribute the same to the legal heirs of the deceased,” says SR Patnaik, partner (head-taxation), Cyril Amarchand Mangaldas.
How To Complete The Formalities
One of the first things that needs to be done is to get registered on the Income Tax Department’s e-filing portal as a representative assessee. “For this, one needs to submit key documents that include PAN cards of both the deceased and the legal heir. A copy of the death certificate and also a valid proof of legal heirship,” says Madhupam Krishna, Securities and Exchange Board of India (Sebi) registered investment advisor (RIA) and chief planner, WealthWisher Financial Planner and Advisors.
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After the application is verified, the legal heir will be granted access to the deceased person’s tax profile.
What Should Be Done Going Ahead
The legal representative/executor/administrator shall have to file income tax returns on behalf of the deceased till the time the estate of the deceased keeps generating income and such estate has not yet been distributed or legally transferred to the legal heirs of the deceased. The PAN card of the deceased may remain active till the estate is liquidated and/or distributed to the legal heirs and all the tax obligations are settled. Once the estate ceases to exist, it is important to have the PAN card cancelled.
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“It is mandatory to cancel the PAN Card of the deceased if all tax-related matters are settled, and the same can be done by writing a letter to the Assessing Officer or filing Form 49A and surrendering the PAN to NSDL or UTIISL centres,” says Jain.
Failing to cancel and surrender the PAN Card of the deceased can lead to an Income Tax notice from the Department of Income Tax, and it may even lead to the blockage of the legal transfer of assets and properties.
