Is It Necessary to File ITR of Deceased Person? A Complete Guide for Legal Heirs

Losing a loved one brings emotional and financial challenges, and amidst these, many legal heirs wonder: is it necessary to file ITR of deceased person? The answer is often yes, especially if the deceased earned taxable income in the financial year. Filing the Income Tax Return (ITR) for the deceased is a crucial step to ensure legal compliance and proper closure of the financial affairs of the deceased person. This article explains when and why filing is necessary, who should file the return, and how to navigate the process efficiently. If you are unsure about the obligations surrounding ITR for deceased, this guide is designed to clarify your doubts and assist you with the essential steps.

The confusion around legal heir filing return often leads to missed deadlines and penalties. Understanding your duties as a legal heir or executor can make this task simpler and help avoid complications. Let’s explore all you need to know about filing an Income Tax Return Filing for a deceased person.

Understanding the Legal Obligation

When someone passes away, the responsibility to file their tax returns does not automatically disappear. According to Section 159 of the Income Tax Act, if the deceased person had taxable income during the financial year, the legal heirs or executors are obligated to file the Income Tax Return on their behalf. This legal requirement raises the question: is it necessary to file ITR of deceased person? The answer is yes, because it ensures that the tax liabilities are settled and any refunds due are processed.

The legal heir is usually a close family member named in the will or someone recognized through a legal heir certificate. The executor is the person appointed to manage the deceased’s estate and financial matters. Both play important roles in the ITR for deceased filings.

Filing the ITR for the deceased also protects the legal heirs from future tax disputes or notices that may arise if the tax department believes that returns have not been filed timely or correctly.

When Is Filing ITR for Deceased Mandatory?

One of the most common questions is is it necessary to file ITR of deceased person in every case. The law mandates filing the return in the following scenarios:

• The deceased person’s income during the financial year exceeded the basic exemption limit.
  
• The deceased had income from sources such as salary, business, capital gains, or other taxable income.
  
• The deceased was eligible for a refund on TDS or advance tax paid. Learn more about what is TDS.
  
• Income was earned by the deceased during part of the year, and the tax department requires a return to be filed for assessment.
  
• The deceased was engaged in a business or profession requiring mandatory filing.
  

Conversely, if the deceased person did not earn any taxable income or had income below the exemption limit, filing may not be necessary. However, it is always safer to check with a tax consultant to confirm if filing is required to avoid future issues.

The consequences of ignoring this requirement can include penalties, delayed refunds, or notices from the income tax department. This clearly shows why it is necessary to ask, is it necessary to file ITR of deceased person and ensure timely compliance.

Two Returns Concept: Income Before and After Death

A unique aspect of filing ITR for a deceased person is the concept of two separate returns—one for income earned before death and another for income earned from inherited assets after death. This division often confuses legal heirs when deciding how to file.

• Income before death: The legal heir is responsible for filing a return covering income earned by the deceased from the start of the financial year until the date of death.
  
• Income after death: Income generated from assets inherited by the heirs after the date of death (such as rent, interest, dividends) needs to be filed separately, usually by the executor or legal heir.
  

For example, if Mr. Verma passed away on November 15, 2024, the legal heir must file an ITR for his income from April 1 to November 15, 2024. Then, income generated from his assets (like rental income or fixed deposit interest) from November 16, 2024, to March 31, 2025, must be declared separately.

This distinction is critical to accurately fulfill tax obligations and avoid confusion over whose responsibility it is to file which return. For filing and verification, using a Digital Signature Certificate (DSC) can simplify the process.

Who Can File ITR for a Deceased Person?

Understanding who files ITR for a deceased person is essential in deciding the right course of action. Generally, the following individuals can file the ITR on behalf of the deceased:

• Legal heirs who inherit the property and liabilities as per the legal heir certificate or succession certificate.
  
• Executors appointed in the deceased’s will or by the court to manage the estate.
  
• Family members authorized to act as representatives of the deceased’s financial matters.
  

To file the return, certain documents are required to prove the legal heir’s authority:

• Death Certificate of the deceased person.
  
• Legal Heir Certificate or Succession Certificate.
  
• PAN card of the deceased.
  
• Bank statements, Form 16, Form 26AS, or other proof of income.
  
• Copy of the will (if applicable).
  

This documentation ensures the income tax department can verify the filer’s authority, preventing misuse of the deceased’s PAN.

Step-by-Step Guide: Filing ITR as a Legal Heir

Filing the ITR on behalf of the deceased can feel overwhelming, but following these steps will help streamline the process:

Step 1: Register as Legal Heir on Income Tax Portal

Visit the official Income Tax e-filing portal and register as the legal heir by submitting the death certificate and legal heir certificate.

Step 2: Upload Required Documents

Upload scanned copies of the death certificate, legal heir certificate, PAN card of the deceased, and income proofs during the registration process.

Step 3: Await Approval

The tax department will verify the documents. Approval might take up to 15-30 days, after which you can proceed with filing the return.

Step 4: File the ITR

Once registered, file the ITR either online through the e-filing portal or offline by submitting a physical form, as per your convenience.

Step 5: E-Verification

Complete the process by verifying the ITR electronically using Aadhaar OTP, Digital Signature Certificate (DSC), net banking, or by sending the signed ITR-V form to the Centralized Processing Centre.

This step-by-step guide helps legal heirs comply with all procedural requirements smoothly, answering many who ask, is it necessary to file ITR of deceased person?

Tax Liability of Legal Heir

One concern for many legal heirs is whether they are personally liable for the deceased’s tax dues. The law limits the tax liability to the estate inherited. This means:

• Legal heirs are responsible for paying taxes on income earned by the deceased before death.
  
• Taxes on income generated by the inherited assets after death are also the responsibility of the heirs.
  
• Personal assets of the legal heirs are generally protected from being used to settle the deceased’s tax dues.
  
• Penalties and interest may apply for delayed filings or payments.
  

It is important to note that prosecution or legal action against legal heirs for non-filing or evasion is rare unless fraud or deliberate concealment is involved. Proper filing helps avoid such complications.

Common Mistakes & Challenges

Legal heirs often face several challenges while filing ITR for deceased persons:

• Filing under the deceased person’s PAN without registering as a legal heir can result in rejection.
  
• Submission of incomplete or incorrect documents delays approval.
  
• Confusion about deadlines leads to late filing penalties.
  
• Mixing up income before and after death can cause errors in the returns.
  

Avoiding these mistakes requires careful planning and, when needed, professional assistance. Remember, is it necessary to file ITR of deceased person is not just about compliance but about preserving the estate’s integrity.

Pro Tips for Smooth Filing

• Keep bank statements, Form 16, and Form 26AS handy and updated.
  
• Begin the legal heir registration process as soon as possible to avoid delays.
  
• If the estate has complex investments or business income, consult a tax professional.
  
• Maintain clear records of inherited assets and income sources.
  
• Respond promptly to any income tax department notices.

If the deceased had business or professional income, ensure compliance with other filings like GST return filing or Udyam Registration.

Final Thoughts: Your Legal Duty, Simplified

Answering is it necessary to file ITR of deceased person is critical for all legal heirs. Filing the Income Tax Return on behalf of a deceased individual is not just a legal obligation but also a responsibility that helps avoid future financial and legal complications. By understanding the rules, organizing documents, and following the right steps, legal heirs can ensure smooth compliance. Remember, handling these matters carefully honors your loved one’s legacy and protects the estate.

Need expert help with legal heir filing return and ITR for a deceased person? Finodha offers affordable, end-to-end compliance services including legal heir registration, ITR filing, and support. Reach out today to ensure your tax filings are done correctly and on time.

Frequently Asked Questions (FAQs)

---

More Information: https://taxinformation.cbic.gov.in/

Read more interesting articles: