Income Tax Regulations: Everyone has questions regarding income tax. Today, we will address a common tax-related inquiry that you may have pondered at least once: What occurs to a person’s tax obligations if they pass away before submitting their Income Tax Return (ITR)? Is the tax forgiven by the Income Tax Department, or does someone else have to take on this responsibility? If you’re interested in finding out, we have the answer for you.
Who is responsible for paying income tax?
As per Section 159 of the Income Tax Act, if a taxpayer dies before the conclusion of their tax year, their heirs are accountable for settling taxes on that individual’s income. In simple terms, the person who inherits the deceased’s assets is the one required to pay the tax.
Is the heir required to pay the tax from their own funds?
Many individuals might question what occurs if the tax amount is excessively high. The Income Tax Department provides some assistance in this regard. According to income tax law, a legal heir is only responsible for the value of the property they received from the deceased. In other words, if someone inherited property valued at Rs 5 lakh, but the deceased had a tax liability of Rs 7 lakh, the heir is only obligated to pay tax on Rs 5 lakh. They cannot be compelled to cover the remaining Rs 2 lakh from their personal finances.
What steps should be taken following the taxpayer’s death?
Initially, you will need to access the official e-filing portal of the Income Tax Department. There, you must register as the representative of the deceased. Without this registration, you will be unable to file any returns on their behalf.
You will be required to upload several essential documents for registration:
– Death certificate of the deceased
– PAN card of the deceased
– PAN card of the heir
– Proof of legal heirship
What are the consequences of not paying tax?
If the heirs neglect to pay the income tax after the taxpayer’s passing or intentionally fail to do so, the Income Tax Department may issue a notice in the name of the deceased. If the tax remains unpaid beyond the due date, the department will impose penalties and interest, similar to those applicable to a living taxpayer.