CA Satish Badve
We came across with many problems to file the Income Tax Return of a dead person by his legal representative. The shortcomings, advice and suggestions are enumerated in this note.
The legal representative can file the return for one assessment year only after the death of the person. In case the person died on 23.07.2021 before filing the Income Tax Return then, his legal representative can register her/himself on the Income Tax Site on behalf of the dead person and file the return for FY 2020-21. The income accrues or arises during the period from 01st April 2021 till the date of death 23.07.2021 is to be added in the income of the legal representative, if he/she is hundred percent owner of the assets, deposits, of the dead assesses. This is because the legal representative can file the return for one Assessment Year only. The problem arises, if the TDS is deducted for the income during the period from 01.04.2021 to 23.07.2021 then this TDS must be claimed by the Legal Representative being he is offering the income to tax under his own PAN. The LR has another choice to ask for rectification/correction in the TDS returns from the entities who deducted the TDS, However, in the scenario the task is next to impossible. I suggest the TDS should be transferred to the Registered Legal Representative on the Income Tax Site as there is no claimant of TDS of the dead person. The corresponding income offered tax can be easily ascertained from the Income Tax Return of the LR. This must be done automatic and by the CPC only.
Ideally, the care should be taken, that the deposits, assets should be transfer in the legal representative name immediately after the death of the person so that no further TDS is deducted in his name, however the same is easily said than done being emotional issue and particularly in COVID lockdowns and risk involved in consuming time in bank premises. I also suggest, the CBDT should be sensitive enough to understand all such difficulties, issues, whether brought to their notice or otherwise and should take the decision to allow filing the return for two to three years till the situation normalise by the LR. The only decision they have to take whether to allow the basic deduction of Rs.2.50 lacs in the subsequent years.
We also suggest that, if rectification/correction in the TDS returns are requested by the LR the same should be allowed, made easy for the entity who deducted the TDS. The Tax authorities has also sent the massages to the banks, etc to do the TDS return rectification/Revised on priority basis. Once the LR has registered him/herself on the I. T site immediately the TDS under the diseased PAN should automatically considered and recorded in the LR PAN so that, correction is not required.
I think if the Taxpayer Charter is for rights of the live assesses, additional Charter is required for those assesses who are non-live and comply through their LR.
It is also observed that, if you go for payment of Tax under the PAN of the dead person, the same is possible, in this case, it is suggested that no payments should be accepted once the LR is registered. This will help to reduce the hurdles in transfer of the taxes paid along with the TDS.
The above note is based on practical difficulties faced by the assessee, may the law have enough & proper provisions to deal with this situation however, there is some gap in the Law and Practice, we all are there to reduce the same for better compliance.
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