Key Takeaways
- Section 159 makes the legal representative liable to file and pay tax for the income the deceased earned up to the date of death, capped at the value of the estate inherited.
- The legal heir is usually the spouse, a child, or whoever holds a legal heir / succession certificate; register on the portal as a Representative Assessee before filing.
- Income from 1 April to the date of death goes in the deceased's PAN; income the inherited assets earn after death goes in the heir's own return.
- The year of death typically produces two returns: the deceased's final ITR and the heir's own ITR.
- Inheritance itself is not taxed in India (no estate duty); only the income arising from inherited assets is taxable.
- A refund due to the deceased is credited to the registered legal heir after verification.
Who files the income tax return of a person who has died? The legal heir does. Under Section 159, the legal representative files the deceased's return for income earned from 1 April up to the date of death under the deceased's PAN, and pays any tax due, but only up to the value of the estate inherited. Income the estate earns after death is taxed in the heir's own hands.
Losing a parent or spouse is hard enough without a tax notice arriving months later. Yet an unfiled return of a deceased person is one of the most common reasons the Income Tax Department later writes to a grieving family. The good news is that the law is fair here: the legal heir steps into the shoes of the deceased only for the income earned during their lifetime, and only to the extent of what they actually inherit. Nothing beyond the estate is at risk.
This guide is written for the spouse, son, daughter or other legal heir who has been asked, or has realised they need, to file the final income tax return of someone who has passed away during Assessment Year 2026-27 (financial year 2025-26). It walks through the legal basis, who qualifies as a legal heir, the exact portal registration steps, which income goes in which return, how refunds are released, and what happens if the return is skipped.
Looking for expert help with file income tax return for deceased person legal heir? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
The legal basis: Section 159 of the Income-tax Act
Section 159 is the anchor provision. It says that when a person dies, the legal representative is liable to pay any tax the deceased would have been liable to pay, and can be assessed as if they were the deceased. In practical terms, three principles flow from it.
First, the legal representative must file the return for the income the deceased earned from the start of the financial year (1 April) up to the date of death. That income does not disappear because the taxpayer has died; it is assessed in the deceased's name, through the legal heir.
Second, any proceeding that could have been taken against the deceased can be continued against, or started against, the legal representative. A notice, an assessment, or a demand that would have gone to the deceased is instead served on the legal heir who has registered on the portal.
Third, and this is the protection families most need to understand, the legal representative's personal liability is limited. Section 159(4) makes clear that the legal representative is personally liable for tax only to the extent of the estate of the deceased that has come into their hands and has not been distributed. In plain terms, if you inherit assets worth Rs 12 lakh, the tax, interest and penalty the department can recover from you in respect of the deceased cannot exceed that Rs 12 lakh. Your own salary, your own savings, and assets you did not inherit stay out of reach.
Who is the legal heir or legal representative
A legal representative is the person who in law represents the estate of the deceased. In most families this is straightforward:
- The spouse of the deceased.
- The children (son or daughter).
- The parents, where there is no spouse or child.
- Any person named in a will as executor, or a person who holds a legal heir certificate, surviving member certificate, or a succession certificate issued by a competent authority or court.
Where there are multiple heirs, one of them typically registers as the legal heir on the portal to file the return, though the underlying liability and the estate are shared among all heirs as per succession law. It is sensible for the family to agree on who will register and file, and to keep the documentation ready so the department can verify the relationship.
The department does not expect you to prove your share of the estate at the registration stage. It only needs to be satisfied that you are a genuine legal representative of the deceased. That is why the death certificate plus one of the heirship proofs, together with an indemnity, is usually enough to get the request approved. The apportionment of any tax or refund among several heirs is a family matter that sits outside the return itself.
Step-by-step: registering as a legal heir on the e-filing portal
You cannot simply log in to the deceased's account and file. The correct route is to register yourself as a Representative Assessee against the deceased's PAN, get the department's approval, and then file on their behalf. Here is the process on the income tax e-filing portal.
| Step | Action | Document / detail needed |
|---|---|---|
| 1 | Keep the deceased's PAN active and your own PAN registered on the portal | PAN of deceased; your own PAN and login |
| 2 | Log in with your own credentials; go to Authorised Partners > Register as Representative Assessee | Your e-filing login |
| 3 | Select Category of Assessee: Deceased (Legal Heir) and enter the deceased's PAN and details | Deceased's PAN, date of death |
| 4 | Upload the death certificate | Death certificate (municipal / registrar issued) |
| 5 | Upload proof that you are the legal heir | Legal heir certificate / surviving member certificate / court order / registered will |
| 6 | Upload PAN cards | PAN of deceased and PAN of legal heir |
| 7 | Upload an indemnity / affidavit and (if asked) an order of the court or authority | Notarised indemnity or affidavit as prescribed |
| 8 | Submit the request and wait for department approval | Approval status shown under Representative Assessee |
| 9 | After approval, log in and switch to the deceased's PAN to file the return | Access enabled post approval |
Once the request is approved, your dashboard lets you act on behalf of the deceased. You can then prepare and submit the return, respond to notices, and track refunds against the deceased's PAN. Approval is not instant; apply well before the filing deadline so a rejection or a request for more documents does not push you past the due date.
Do not surrender or cancel the deceased's PAN until every pending return, refund and proceeding is closed. A cancelled PAN blocks both the final return and any refund due to the estate. Cancel it only after the department confirms there is nothing outstanding.
Which income goes in which return
This is the part families most often get wrong, so it is worth being precise. The date of death splits the financial year into two halves for tax purposes.
| Period | Income | Whose return / PAN | Filed by |
|---|---|---|---|
| 1 April to date of death | Salary, pension, business income, interest, rent, capital gains earned by the deceased while alive | Deceased's PAN | Legal heir (as representative) |
| Date of death to 31 March | Income the inherited assets generate: interest, rent, dividends, capital gains after inheritance | Legal heir's own PAN | Legal heir (in their own return) |
The deceased's final return uses the same ITR form that would have applied to them (ITR-1, ITR-2 and so on, based on their income sources), and claims the deductions and the basic exemption they were entitled to for the full year. The legal heir signs and verifies it in their representative capacity.
Income arising after the date of death belongs to whoever inherits the asset. If you inherit a fixed deposit and it pays interest in March, that interest is your income and goes in your own return. If the estate is still under administration and income has not yet been distributed, it can be assessed in the hands of the executor under the rules for income of an estate, but for most families the simpler position, income of inherited assets sitting with the heir, is what applies.
For a refresher on choosing the right form and the AY 2026-27 due dates, see our ITR filing guide for AY 2026-27, and keep the documents required for ITR filing checklist handy while you gather the deceased's paperwork.
Worked example: a taxpayer who died mid-year
Facts. Mr Rao, a salaried employee, died on 30 September 2025. For AY 2026-27 (FY 2025-26) his income position is:
- Salary drawn from 1 April to 30 September 2025: Rs 6,00,000
- Interest on his fixed deposits credited up to 30 September 2025: Rs 40,000
- After his death, the same fixed deposits (inherited by his wife) earned interest from 1 October 2025 to 31 March 2026: Rs 38,000
Return 1: the deceased's final ITR (Mr Rao's PAN, filed by his wife as legal heir).
| Component | Amount (Rs) |
|---|---|
| Salary (1 Apr to 30 Sep) | 6,00,000 |
| FD interest up to date of death | 40,000 |
| Gross total income | 6,40,000 |
| Standard deduction on salary | 75,000 |
| Total income | 5,65,000 |
Mrs Rao registers as legal heir, files Mr Rao's return on his PAN for total income of Rs 5,65,000, claims his TDS credit, and pays any balance tax or claims any refund due. She verifies it as the representative assessee.
Return 2: Mrs Rao's own ITR (her PAN).
The Rs 38,000 of FD interest earned after 30 September belongs to Mrs Rao because she inherited the deposits. She adds it to her own income for the year and reports it in her own return. She does not add it to her late husband's return, and she is not taxed on the value of the deposits she inherited, only on the interest they earned after the date of death.
This split, one return for the deceased up to death and one for the heir after death, is the pattern in almost every year-of-death case.
Refunds due to the deceased
If the deceased had excess TDS or advance tax, a refund is due on the final return. The refund is processed against the deceased's PAN and credited to the registered legal heir. To make this smooth:
- Pre-validate a bank account on the portal and link it to the deceased's PAN. Ideally use an account where the legal heir is a holder or a nominee.
- Ensure the return is verified. An unverified return is not processed, and no refund is released.
- If the department needs confirmation, respond promptly with the legal heir certificate and indemnity already on file.
Because the refund follows the deceased's PAN, do not close that PAN or the linked bank account until the money is received.
Consequences of not filing the deceased's return
Skipping the final return does not close the file; it usually reopens it. Where the department has information (Form 26AS, AIS, TDS records) showing income in the deceased's name and no return, it can act against the legal representative under Section 159.
| Notice / provision | What it means for the legal heir |
|---|---|
| Section 139(9) | Defective return notice if the filed return is incomplete or inconsistent; must be corrected in time |
| Section 142(1) | Enquiry / call for the return or information before assessment |
| Section 148 | Notice for income escaping assessment, served on the legal representative for the deceased's unreported income |
| Interest 234A/B/C | Interest for late filing and short payment of tax |
| Penalty / late fee | Late-filing fee under Section 234F and penalties, all recoverable only up to the estate value |
The practical takeaway: filing the final return on time keeps the family compliant and closes the deceased's tax file cleanly. Ignoring it invites notices that are more stressful to answer years later, when documents are harder to find. If you are unsure the return is complete, our note on common ITR filing mistakes that delay refunds and trigger notices covers the errors to watch for.
Inheritance is not taxed; only income from inherited assets is
India abolished estate duty in 1985 and has no inheritance tax today. So when you receive property, shares, deposits or cash from a deceased person, there is no tax on the value you inherit, whether you are a legal heir under a will or under succession law. Receipt of an inheritance is specifically outside the scope of the gift-tax provisions as well, because transfers from a relative and receipts under a will or by inheritance are excluded.
What is taxable is what those assets earn after they become yours: rent from an inherited flat, interest from inherited deposits, dividends from inherited shares, and capital gains when you eventually sell. For capital gains, you also step into the deceased's shoes on the cost and the holding period, the original cost and date of acquisition carry over, which matters when you compute gains on a later sale. That, however, is a matter for your own return in the years after inheritance, not for the deceased's final return.
A short checklist before you start
Before filing, make sure you have: the death certificate; the deceased's PAN and your PAN; a legal heir, surviving member or succession certificate (or the registered will); the deceased's Form 16 / pension statements, bank interest certificates and Form 26AS/AIS up to the date of death; a pre-validated bank account linked to the deceased's PAN for any refund; and the notarised indemnity/affidavit the portal asks for during registration.
Register as the representative assessee first, wait for approval, then file the deceased's return for income up to the date of death, and separately include any post-death income from inherited assets in your own return. Do these two things in the same year of death and the tax file closes cleanly, with nothing left to surface as a notice later.
Sources: Section 159 (legal representatives) and Section 159(4) of the Income-tax Act, 1961; provisions on liability of representative assessees; Section 56(2)(x) exclusions for receipts under a will or by inheritance; Section 234F late-filing fee and Sections 234A/B/C interest; income tax e-filing portal (incometax.gov.in) Register as Representative Assessee process; CBDT guidance on legal heir registration and refunds.
