According to reports from Mint, the Income Tax Act of 1961 applies for financial year 2024-25, with the updated Income Tax Act 2025 coming into effect from the next financial year. Under the current scheme, legal representatives of a deceased taxpayer are primarily responsible for filing the ITR if required. The return must be filed for the period from 1 April of the financial year to the date of the individual's demise. As explained in Section 139 of the Income Tax Act, the return must be filed diligently if the deceased individual's total income exceeds the applicable basic exemption limit during the given financial year. The Economic Times reports that individuals and Hindu Undivided Families (HUFs) are required to file income tax returns if their total taxable income before the applicable exemptions and deductions exceeds the basic exemption limit.
As reported by Mint, the basic exemption limits vary depending on the taxation regime and individual's age. For the old regime (below 60 years), the basic exemption limit is ₹2.5 lakh. For the old regime (60 to 80 years), it stands at ₹3 lakh, while for the old regime (80 years and above), it is ₹5 lakh. Under the new regime (all individuals), the basic exemption limit is ₹4 lakh. However, even if total income is below these limits, filing might still be compulsory if certain conditions are met, such as electricity bills exceeding ₹1 lakh or foreign travel expenses of more than ₹2 lakh during the financial year. The Economic Times notes that even if you're exempt, file a return if you have a refund due, or you need to apply for a loan, passport or visa.
According to The Economic Times, Resident and Ordinarily Resident (ROR) taxpayers with foreign assets or income must carefully disclose overseas investments, dividends and accounts while filing ITR. Direct foreign holdings require Schedule FA reporting, unlike Indian international mutual funds. Tax authorities are leveraging global information exchange to track overseas assets and income, with accurate reporting in Schedule FA being crucial to avoid penalties under the Black Money Act. Returning Indians face new tax filing complexities, as foreign retirement accounts now necessitate the more detailed ITR-2, moving away from the simpler ITR-1. Taxpayers must diligently disclose all foreign holdings, including dormant accounts and employee stock options, to ensure compliance.
According to Mint, in cases where the deceased spouse has left no will, assets are inherited by legal heirs in accordance with applicable succession laws. A nominee appointed on a demat or bank account only facilitates the transfer process and does not automatically make the nominee the owner of the assets. The holdings are transferred from the nominee (as the caretaker) to the correct legal heir. While the nominee may initially receive the assets, they still hold them for the benefit of the rightful legal heirs only. The tax filing responsibility remains linked to the deceased person's income, and the legal representative's obligations are governed by the Income Tax Act.
As reported by Mint, understanding these provisions clearly, along with numerous variations in legal parlance, is critical to resolving such problems. It is prudent to consult a legal advisor and a tax consultant to identify the root of such issues before proceeding with the filing. This ensures that the concerned family can complete post-death financial formalities correctly and avoid confusion regarding nominations, tax responsibilities, and inheritance. The importance of professional guidance becomes particularly crucial when dealing with complex scenarios involving multiple jurisdictions and international asset disclosures. The Economic Times emphasizes that understanding these provisions clearly is essential, as errors can attract penalties under the Black Money Act, making accurate disclosure and timely corrections essential for compliance.
