According to reports from Mint and Business Standard, a deceased person's income tax matters do not automatically close upon death. Legal representatives must continue filing returns, answering notices, and paying tax demands from the deceased's assets. The department cannot validly send fresh notices in the deceased's name, and representatives may challenge such notices rather than simply answering them. Cases started during the taxpayer's lifetime can continue against the representative, with personal liability normally not exceeding the value of the deceased's available estate. As per Business Standard, the death of a taxpayer does not wipe out pending tax responsibilities, with legal representatives generally having to file outstanding returns, respond to proceedings, and pay tax dues from the deceased person's estate.
As reported by Mint and Business Standard, legal representatives must file returns covering income earned before death, with the period starting on the first day of the financial year and ending upon death. Any unfiled returns from earlier years must also be submitted. The representative should register as a legal heir on the income tax portal using death certificates and PAN details for both individuals. Legal heir proof may include a will, succession certificate, or the portal's affidavit, with approval allowing the representative to file and electronically verify returns. According to Business Standard, if the taxpayer died during a financial year, the representative has to deal with the return covering the deceased's taxable income up to the date of death. Legal heirs should reconcile Form 26AS/AIS/TIS, bank statements and capital gains data before filing, since post-death income belongs to the estate/beneficiaries and is not to be included in the deceased's return.
According to Mint and Business Standard, after registration approval, representatives should examine every notice carefully, checking its type, date, named recipient, and reply deadline. The notice may concern scrutiny, reassessment, information, or unpaid tax demands, requiring a valid reply and requested documents. Legal heirs should establish facts before deciding their response, checking whether the case started before or after death and whether officials knew about the death. As per Business Standard, the first question a legal heir should ask after receiving a notice is whether the proceeding was initiated when the taxpayer was alive. If a proceeding was validly commenced against a taxpayer before death, it is deemed to have been taken against the legal representative and can continue from the stage it had reached. However, a fresh proceeding initiated after death must generally be directed against the legal representative in that capacity and within the applicable limitation period. Legal heirs should not assume that every notice has to be accepted simply because it comes from the tax department, and may have grounds to challenge notices issued after death.
According to Business Standard, generally, legal representatives' liability is ordinarily limited to the extent to which the deceased person's estate can meet the tax liability. If the deceased left assets worth ₹20 lakh but the tax demand is ₹30 lakh, the heir is not normally expected to pay the additional ₹10 lakh from their personal savings. However, there is an important exception - if tax remains unpaid and the legal representative creates a charge over, disposes of or parts with estate assets, the representative may become personally liable up to the value of those assets. As per Business Standard, the legal position can vary depending on the facts and judicial interpretation, with some High Courts treating defects as going to the root of jurisdiction while others have taken different approaches where a legal representative participates in proceedings without first objecting to the notice.
As reported by Business Standard, families should prepare a complete statement of the deceased person's assets and liabilities before transferring or distributing anything, including property, bank deposits, shares, mutual funds, insurance proceeds, business interests, taxes, loans and other known obligations. The practical sequence involves registering as the legal representative on the income-tax portal, checking outstanding demands, notices, returns, Form 26AS and AIS, identifying assessments and proceedings already pending, filing returns for income earned by the deceased up to the date of death, separately accounting for income generated by the estate after death, and keeping sufficient funds aside for established or reasonably anticipated tax liabilities. Legal heirs should establish the date of death, date of notice and status of proceedings before deciding how to respond, and should settle the tax position first and distribute the estate later.
