Death settles all. Well, not in the case of income tax. Even after death, the tax liability of the person remains. The tax still needs to be paid on the income that is being received by the family on behalf of the deceased person, if it exceeds the basic exemption limit. Currently, the exemption limit is Rs 5 lakh per annum.
If the ITR is not filed, the legal heir is liable to pay the penalty or fines. They may also face penal consequences. However, they are only responsible to pay the taxes or penalties to the extent of the money he has inherited.
The penalty to be paid by the heir depends on the tax liability of the deceased person. If the liability of the deceased falls in a higher tax bracket, then the heir may end up paying their entire share of the inheritance.
For example, let’s presume that a person received Rs 5 lakh from the share of the deceased person’s property. The tax liability of the deceased is Rs 15 lakh. Legally, the heir will only be liable to pay a maximum of Rs 5 lakh as tax/penalty for the deceased. The personal money and property of the heir cannot be used to mitigate the remaining liability of the deceased.
Who is a legal heir?
The legal heir represents the assets of the deceased person. He/she is declared as a legal heir either by the registered Will or by a court. The registration can be done on the income tax department’s (I-T department) portal. Here are the documents that are accepted as legal heir certificates:
How to register as a legal heir on I-T Department’s portal?
Now, after the request is approved. The legal heir can file the ITR with the help of a chartered accountant (CA) or by themselves.
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