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How legal heirs of deceased can file IT return

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  • As per the provisions of Section 139(1) of the Income-tax Act, 1961, every person (other than a company or a firm) whose total taxable income during the previous year exceeds the maximum amount which is not chargeable to income-tax ( 250,000 for FY 2020-21 and FY 2021-22) is required to file an income tax return

My cousin died in January 2021. All his savings bank accounts have since been transferred to his wife.  What is the procedure for filing income tax returns for a deceased person by  his legal heir or representative?

                                        –  K Nagaraj

 

As per the provisions of Section 139(1) of the Income-tax Act, 1961, every person (other than a company or a firm) whose total taxable income during the previous year exceeds the maximum amount which is not chargeable to income-tax ( 250,000 for FY 2020-21 and FY 2021-22) is required to file an income tax return.

As per the provisions of Section 159 of the Act, the legal representatives or heirs of a deceased person shall be liable to pay any tax liability due, on behalf of the deceased and are deemed to be assessed to tax on behalf of such deceased. 

For this, the legal heirs would be required to register as the representative assessees of the deceased through their e-filing profile. Below are the steps if you have to register as a legal representative. 

· Log in to their own income tax e-filing account, click on authorized partners on the home page  and select register as representative assessee

·Next, click on ‘Let’s get started’ and create a new request.  Select the category as ‘Deceased (Legal Heir)’ in the ‘category of an assessee who you want to represent and continue. Thereafter, fill in the requisite details.

 Details like PAN of deceased, date of death, the reason for registration, details of legal heirs, etc. would be required. Also, documents like a copy of the PAN card of the deceased, copy of death certificate, copy of legal heir proof, and copy of the letter of indemnity, etc. as applicable, would need to be uploaded.

Accordingly, as per this case, once your cousin’s wife is registered as  a legal representative, she can file the income tax return on behalf of the deceased for FY 2020-21. Please note that a belated IT return for FY 2020-21 can be filed upto 31 March.

In relation to the eligibility of standard deduction, as per the provisions of the Act, standard deduction of the actual salary income subject to a maximum of 50,000 is allowed to be claimed while computing the income chargeable under the head salary for the deceased person. 

The same is not required to be proportionated till the date of death.

Assuming that any term deposits were transferred to the widow, the interest income earned on these post transfer will be considered as taxable income in her individual tax return.

In case excess tax has been deducted (TDS) in the hands of the deceased taxpayer, the same can be claimed as a refund while filing the tax return by the representative assessee. Additionally, bank account details of the representative assessee would be required to be furnished in the tax return being filed for FY 2020-21 and refunds, if any, can be claimed by the widow.

 The TDS schedules in the ITR forms also allow a taxpayer to claim such TDS which has been deducted in the PAN of the spouse. Accordingly, this option may also be explored by the wife while filing her individual tax return, if the corresponding interest income is offered to tax by her.

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.

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