Death does not end income tax duties: What legal heirs must do about pending returns, notices and unpaid dues

A person’s death does not automatically close their income tax matters. They may file returns, answer notices and pay tax demands. However, payments come only from the assets left by the deceased.

Action may be needed when the deceased earned taxable income without filing a return. It may also be required when tax cases or unpaid demands remain pending. Family disputes can make it difficult to identify legal heirs.

The assessing officer should then be told about the situation. If no legal heir exists, responsibility passes to the person inheriting the assets.

The legal representative must file a return covering income earned before death. The period starts on the first day of the financial year and ends upon death. Any unfiled return from an earlier year must also be submitted.

Registering and filing returns

The representative should register as a legal heir on the income tax portal. Required documents include the death certificates and PAN details for both individuals.

Legal heir proof may include a will, succession certificate or the portal’s affidavit. The assessing officer or Centralised Processing Centre must approve the registration request.

Hitesh Jain, partner at N A Shah Associates, spoke to ET. He said approval allows the representative to file and electronically verify returns.

A death close to the deadline may make timely filing difficult. The representative can request more time by explaining the genuine reason for the delay.

The representative should check all financial records before filing. These include Form 26AS, AIS, TIS, bank statements, and capital gains details. Income earned after death should not appear in the deceased’s return.

Handling tax notices and payments

The department cannot validly send a fresh notice in the deceased’s name. The representative may challenge such a notice rather than simply answer it.

After registration approval, the representative should examine every notice. They should check its type, date, named recipient and reply deadline.

Rahul Charkha, partner at Economic Laws Practice, spoke to The Economic Times. He explained what representatives should do after the registration approval.

“Once approved, the heir should log in, access the notice to understand its nature (for example, a scrutiny notice, reassessment notice, demand notice, or request for information) and note the deadline for responding to it,” Charkha told ET.

Ashish Mehta, partner at Khaitan and Company, spoke to ET. According to him, cases started during the taxpayer’s lifetime could continue against the representative.

The notice may concern scrutiny, reassessment, information or an unpaid tax demand. A valid notice requires a timely reply and the requested documents.

Personal liability normally cannot exceed the value of the deceased’s available estate. However, representatives must handle inherited assets carefully.

They should not distribute, transfer, sell or mortgage estate assets too early. Doing this while taxes remain unpaid can create personal liability. Even then, liability cannot exceed the value of assets wrongly handled.

Legal heirs should establish all facts before deciding their response. They must check whether the case started before or after death. They should confirm whether officials knew about the death.

Prompt registration and careful checking can prevent unnecessary trouble. Heirs should protect estate assets until all lawful tax dues are settled.