My cousin died in January 2021. All his savings bank accounts have been transferred to his wife. What is the procedure for filing income tax return for a deceased person by his legal heir or representative?
– K Nagaraju
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 not chargeable to income-tax ( 250,000 for FY 2020-21 and FY 2021-22) is required to file income tax returns.
As per the provisions of section 159 of the Act, the legal representative or heir of the deceased person shall be liable to pay any tax liability due on behalf of the deceased and is deemed to have been assessed to tax on behalf of such deceased.
For this the legal heirs will have to register as the representative assessee of the deceased through their e-filing profile. Below are the steps if you have to register as a legal representative.
Log in to your own Income Tax e-filing account, click on Authorized Partners on the home page and select Register as Representative Assessee
Thereafter, click on ‘Let’s get started’ and create a new request. Select the category as ‘Decedent (Legal Heir)’ in the category of an assessee whom you wish to represent and continue. After this, fill the required details.
Details like PAN of the deceased, date of death, reason for registration, details of legal heirs etc. will be required. Also, documents like a copy of PAN card of the deceased, copy of death certificate, copy of legal heir proof, and copy of indemnity letter, as applicable, will need to be uploaded.
Accordingly, as in this case, once your cousin’s wife is registered as legal representative, she can file income tax return for the financial year 2020-21 on behalf of the deceased. Please note that belated IT returns for FY 2020-21 can be filed till March 31.
In respect of eligibility for standard deduction, as per the provisions of the Act, the standard deduction of actual salary income shall be subject to a maximum of Rs. 50,000 is allowed to be claimed while computing the income chargeable under the head Salary to the deceased person.
No need to be proportionate to the date of death.
Assuming that any fixed deposits were transferred to the widow, the interest income earned on these post transfers would be treated as taxable income in her personal tax return.
If additional tax (TDS) has been deducted in the hands of the deceased taxpayer, it can be claimed as refund by the representative assessee at the time of filing the tax return. In addition, the bank account details of the representative assessee will be required to be furnished in the tax return being filed for the financial year 2020-21 and refund, if any, can be claimed by the widow.
The TDS schedule in the ITR form also allows the taxpayer to claim such TDS which has been deducted in the PAN of the spouse. Accordingly, this option can also be explored by the wife while filing her personal tax return, if the interest income concerned is offered to be taxed by her.
Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG in India.
download
The app will get 14 days of unlimited access to Mint Premium absolutely free!