Final Tax Return After Death in India: Guide for Legal Heirs

“Nothing is certain except death and taxes.” – Benjamin Franklin (1789)

For most families, this famous quote feels philosophical until it becomes painfully real.

Often, it is only after receiving a notice from the Income Tax Department that families realise a crucial legal truth: tax responsibilities do not automatically end when a person passes away. This article discusses Tax Return After Death in India, explaining how income tax obligations continue even after a taxpayer’s death. It highlights who is responsible for filing the final Income Tax Return, how income earned before and after death is treated, and the legal protections available to heirs under Indian tax law. The article also covers deadlines, documentation, and the consequences of non-compliance to help families avoid penalties and loss of refunds.

Now, To understand this scenario better, let’s look at a fictional example.

A Fictional Case Illustration

Amit (a fictional example used purely for illustration) passed away on 10th September 2025 at the age of 60. While his family was dealing with the emotional and administrative challenges following his death, income tax compliance was understandably not their immediate priority.

However, Amit had earned income while he was alive. Under Indian income tax law, that income remains taxable, and the responsibility to comply with tax filing requirements does not disappear with death.

Ironically, Amit may also have been eligible for a tax refund, and the law is equally clear on this point death does not extinguish a taxpayer’s right to receive money legally owed to them.

This brings us to an often-overlooked but extremely important topic: filing the final Income Tax Return (ITR) of a deceased person.

This guide explains:

• What the final ITR is and why it matters
• Who is legally responsible for filing it
• How income before and after death is treated
• What Section 159 of the Income Tax Act actually means
• What happens if the return is not filed on time

What Is the Final Income Tax Return of a Deceased Person?

The Final Income Tax Return (Final ITR) is the income tax return that must be filed on behalf of a person who has passed away, covering the income earned up to the date of death within the relevant financial year.

Why the Final ITR Is Required

Income tax liability in India is based on income earned, not on whether the taxpayer is alive at the time of filing. If income was generated during the financial year and it crosses the basic exemption limit, the return must be filed.

This applies even if the individual passed away mid-year.

Case Snapshot: Amit (Fictional Example)

Particulars	Details
Name	Amit (fictional)
Age	60
Date of Death	10 September 2025
Financial Year	FY 2025–26
ITR Filing Starts	1 April 2026
Last Date (Regular Filing)	31 July 2026
Belated Return Deadline	31 December 2026

This snapshot helps illustrate how tax timelines continue independently of personal life events.

Who Is Responsible for Filing the Final ITR?

Who Is a Legal Representative?

Under Indian income tax law, the responsibility of filing the deceased person’s ITR shifts to a legal representative. This individual effectively steps into the shoes of the taxpayer for compliance purposes.

A legal representative can be:

• A legal heir such as a spouse, child, or parent
• An executor named in the will
• An administrator appointed by a court

Who Files Which Income?

Type of Income	Who Files
Income before death	Legal representative
Salary earned till date of death	Legal representative
Rental income after death	Legal heir / executor
Bank FD interest after death	Legal heir
Dividends / capital income post-death	Legal heir

Correct classification ensures accurate reporting and avoids future disputes or notices.

Income Classification: Before vs After Death

Income Earned Before Death

All income earned or accrued up to the date of death must be reported in the deceased person’s ITR using their PAN.

This includes:

• Salary income
• Business or professional income
• Capital gains concluded before death
• Interest accumulated till the date of death

Income Earned After Death

Income generated after death does not belong to the deceased and must be taxed in the hands of:

• The legal heir, or
• The estate of the deceased

Examples include:

• Rental income from inherited property
• Interest on bank deposits post-death
• Dividends from inherited investments

How to File ITR for a Deceased Person on the Income Tax Portal

The Income Tax Department allows filing through authorised representative access, ensuring legal compliance.

Step-by-Step Process

1. Log in using the legal representative’s PAN
2. Navigate to Authorised Partners
3. Select Register as Representative Assessee
4. Choose Deceased Person as the category
5. Upload required supporting documents
6. Submit the request for approval
7. After approval, file the ITR on behalf of the deceased

Documents Required to File Final ITR

Document	Purpose
Death Certificate	Proof of death
PAN of deceased	Mandatory for filing
PAN of legal representative	Identity verification
Legal heir certificate / will	Proof of authority
Bank statements	Income confirmation
Form 16 / AIS	Salary and tax details

Note: Documentation requirements may vary slightly depending on the facts of the case.

Section 159 of the Income Tax Act Explained

What Section 159 States

Section 159 ensures continuity of tax proceedings while protecting legal heirs.

It provides that:

• The legal representative is responsible for pending tax dues
• Tax proceedings continue after death
• Liability is limited to the value of the inherited estate

Protection for Legal Heirs

A legal representative cannot be held personally liable beyond the assets inherited from the deceased.

What If There Is a Will vs No Will?

If There Is a Will

• The executor named in the will manages tax compliance
• Filing continues until assets are distributed

If There Is No Will

• Assets pass under applicable succession laws
• Legal heirs jointly handle tax obligations

What Happens If the Final ITR Is Not Filed?

Non-filing can create serious and long-lasting consequences.

Consequences Explained

• Income tax notices issued in the legal heir’s name
• Accumulation of interest and late fees
• Penalties for non-compliance
• Loss of eligible tax refunds
• Recovery proceedings from the estate

Can a Tax Refund Be Claimed After Death?

Yes. Any refund due legally belongs to the estate of the deceased.

Conditions to Claim Refund

• ITR must be filed before 31 December
• Legal representative registration must be approved
• Bank account details must be validated

Missing the deadline results in permanent forfeiture of the refund.

Important Deadlines You Must Not Miss

Event	Date
Start of ITR Filing	1 April 2026
Regular Filing Deadline	31 July 2026
Belated Return Deadline	31 December 2026

Key Takeaways for Families

• Tax obligations do not end with death
• Filing the final ITR ensures legal closure
• Refunds are recoverable only through timely filing
• Section 159 protects heirs from unlimited liability
• Early compliance prevents future legal complications

Final Thoughts

This example of Amit reflects a real situation faced by thousands of families across India.

Filing the Final Income Tax Return of a deceased person is not just a statutory requirement it is a critical step to safeguard heirs, recover refunds, and prevent avoidable disputes with the tax authorities.

Timely compliance ensures financial clarity and peace of mind during an otherwise difficult period.