My cousin passed away in January 2021. All of his savings accounts have since been transferred to his wife. What is the procedure for filing income tax returns for a deceased person by their legal heir or representative?
– K Nagaraj
Pursuant to the provisions of Section 139(1) of the Income Tax Act 1961, any person (other than a company or business) whose aggregate taxable income in the preceding year exceeds the maximum amount that is not chargeable to income tax ( ₹250,000 for fiscal years 2020-21 and 2021-22) is required to file a tax return.
In accordance with the provisions of article 159 of the law, the legal representatives or the heirs of a deceased person are required to pay any tax due, in the name of the deceased and are deemed to be taxed in the name of this deceased.
For this, the legal heirs would be required to register as representative beneficiaries of the deceased via their electronic filing profile. Below are the steps if you need to register as a legal representative.
Log in to their own electronic income tax filing account, click on authorized partners on the home page and select register as an assessed representative
·Then click “Let’s get started” and create a new request. Select the category “Deceased (legal heir)” in the “category of an assessee you wish to represent and continue”. Next, fill in the required details.
Details such as deceased’s PAN, date of death, reason for registration, details of legal heirs, etc. would be required. Also, documents such as a copy of the deceased’s PAN card, a copy of the death certificate, a copy of the heir’s legal proof, and a copy of the indemnity letter, etc., if applicable , will need to be downloaded.
Therefore, in this case, once your cousin’s wife is registered as the legal representative, she can file the tax return on behalf of the deceased for the 2020-21 fiscal year. Please note that a late IT return for the 2020-21 fiscal year can be filed until March 31.
With regard to eligibility for the flat-rate deduction, in accordance with the provisions of the law, the flat-rate deduction from actual wage income subject to a maximum of ₹50,000 can be claimed when calculating income attributable to the salary of the head of the deceased.
The same is not required to be proportionate until the date of death.
Assuming all term deposits were transferred to the widow, interest income earned on these post-transfers will be considered taxable income on her individual tax return.
In the event that excess tax has been deducted (TDS) in the hands of the deceased taxpayer, this can be claimed as a refund when filing the tax return by the assessed representative. In addition, details of the assessed representative’s bank account should be provided in the tax return filed for the 2020-21 financial year 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 that has been deducted in the spouse’s PAN. Thus, this option can also be explored by the wife when filing her individual income tax return, if the corresponding interest income is offered for tax by her.
Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG India.
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