What are the tax implications after an account holder dies without filing IT returns?
Ans: If a person dies, the legal heir has to file tax returns on behalf of the deceased, to report the income earned by the deceased until the date of his death, and taxes deducted thereon. Legal heir needs to register oneself on the income tax website for filing the return on behalf of deceased. This is mandatory for e-filing of return on behalf of the deceased person.
The PAN of both the deceased person and legal heir should be registered in the e-filing portal. However, if the deceased person’s PAN is not registered, then the legal heir can register on behalf of the deceased.
Once the request for registration as legal heir is approved, then the person can file return as legal heir on behalf of deceased.
Any income earned after the date of death from the assets inherited from the deceased is taxable in the hands of the legal heir. This would mean that in the year that the person died, the income for the year would need to be segregated between the return of the deceased and the legal heir.
Legal heir should include this income inherited from the deceased in her/his own income while filing own income tax return
