Saturday, May 11, 2024

Guide to Managing Tax Responsibilities as a Legal Heir: Registration, Compliance, and Communication with Tax Authorities

In the event of a taxpayer's death, the responsibility for tax matters, including tax payments, filing income tax returns, and handling assessments, is transferred to the taxpayer’s legal heir or representative. Below is a comprehensive guide detailing the procedures a legal heir must undertake to manage these obligations effectively.

Table of Contents

  1. Registration as Representative Assessee
  2. Accepted Documents for Legal Heir Proof
  3. Computation of Income
  4. Intimating Tax Authorities

Registration as Representative Assessee

To manage the tax affairs of a deceased person, legal heirs must register themselves as a Representative Assessee on the Income-tax Portal. The process is outlined in the following steps:

1Log in to the Income-tax e-Filing Portal using your PAN and password.
2Click on the “Authorised Partners” tab and select “Register as Representative Assessee”.
3Select “Let’s Get Started” followed by “Create New Request”.
4Under “Category of Assessee who you want to represent,” choose “Deceased (Legal heir).” Provide mandatory details such as the deceased's PAN, date of death, and the reason for registration.
5Attach necessary documents: deceased’s PAN card, death certificate, legal heir proof, and if required, additional documents such as a copy of the order passed in the name of the deceased or a copy of the Letter of Indemnity.
6Proceed by clicking ‘Verify the Request’ and then submit for approval.
7After submission, the e-Filing Admin will review the request. Upon approval or rejection, notification will be sent via email and SMS.

Accepted Documents for Legal Heir Proof

Legal heir status can be validated with one or more of the following documents, which must be provided during the registration process on the e-Filing portal:

No.Document Type
1Legal heir certificate issued by a court of law
2Legal heir certificate issued by local revenue authorities
3Surviving members certificate issued by local revenue authorities
4Registered Will
5Family pension certificate issued by State/Central Government
6Official letter from a bank or financial institution confirming the nominee or joint account holder at the time of the deceased's demise

Computation of Income

The computation of income for the deceased and the legal heir is as follows:

PeriodTaxable to
From the start of the fiscal year to the date of deathDeceased taxpayer (the ITR to be filed by the legal representative)
After the date of deathLegal representative

During the transitional period, typically 2-3 months, where assets are being transferred to the legal heir’s name, income generated is taxable in the name of the deceased but filed under the legal representative’s PAN.

Intimating Tax Authorities

Informing the tax authorities of the taxpayer's death, while not mandatory, is highly recommended to prevent potential disputes or complications in tax assessments:

  • Draft a letter to the Jurisdictional Assessing Officer with details like the deceased's PAN, the legal heir's PAN, death certificate, and legal heir certificate.
  • Find the details of the Jurisdictional Assessing Officer under “Jurisdictional Details” after logging into the Income-tax e-filing portal.

By meticulously following these steps, legal heirs can ensure all tax responsibilities are met, thus avoiding any legal repercussions. This comprehensive approach helps maintain compliance and facilitates the smooth transition of fiscal responsibilities after a taxpayer's death.