Income Tax query support needed for income received on death

Hi all,

Unfortunately due to COVID a tragedy happened and my spouse passed away. any help will be appreciated on my queries.

Humble thanks in advance.

Saving Bank account balance

Which is passed on to legal heir - Does this needs to be shown as exempt income in legal heirs return ? Where to declare it in IT Return.

PF Lumsum received from Spouse's EPF –

This amount is exempt from tax, but where does it needs to be shown in legal heirs return

PF pension received from Spouse's EPS - (To widow and child)

Is this amount taxable?
If yes under which header to be shown in Widow and childs' return ?

Gratuity received from Private employer of Spouse -

Is it exempt in some COVID relief measures or will it be taxed like below:

15/26 x Salary ( Basic + DA) last drawn x No. Of completed years of service	15/26600008	276000
Gratuity Actual Received		1225000
2000000		2000000
		(1225000-276000) = Rs. 949000 is taxable ?

Monthly Pension received from Delhi Govt for COVID. Mukhyamantri aarthik sahayata yojna ( Rs. 2500/month)

Will this be taxable in hands of receiver or can exemption be claimed under Section 10(10) BC

NPS Private Amount

Amount invested – 104000

Amount Received as lumpsum – 128000

It is tax free. Where to declare it in legal heir return.

("Amount received by the assessee on closure of account or on his opting out of the NPS Scheme ,

In (ii), amount is received by a nominee on the death of the assessee is exempt")

Hi Nikunj,

I'm truly sorry for your loss, and I appreciate the clarity of your questions during such a difficult time. Let's go through your queries one by one and explain what is taxable, what is exempt, and how/where to report each item in the legal heir's Income Tax Return (ITR).

🔷 General Note:

When a legal heir receives amounts due to the death of a person, some are taxable, while others are exempt, depending on the source and purpose. You're right to be cautious and thorough.

✅ 1. Savings Bank Account Balance (received by legal heir)

Status: Not taxable in hands of the legal heir.
It’s considered inheritance, which is not taxable under Indian Income Tax laws.
No need to report it in the ITR.

👉 Do this:

You may (optionally) mention it under:
Schedule Exempt Income → Others → “Amount received as inheritance”
(But it's not mandatory.)

✅ 2. PF Lumpsum Received from Spouse’s EPF

Status: Fully exempt under Section 10(12) if received by the nominee/legal heir after death of the member.
No tax applies.

👉 Where to show:

In ITR → Schedule Exempt Income → Section 10(12) – Provident Fund receipts

⚠️ 3. PF Pension Received from EPS (to widow and child)

Status: This monthly EPS pension is taxable in the hands of the recipient (widow/child).
Treated as “Income from Other Sources”, not salary or pension (as it's a family pension).
1/3rd of the pension or ₹15,000 (whichever is lower) is exempt under Section 57(iia).

👉 Where to show:

ITR → Income from Other Sources
Claim deduction under:
Deductions → Section 57(iia)

⚖️ 4. Gratuity from Private Employer

Status: If it was received by nominee/legal heir, it is exempt under Section 10(10).

🛑 Even if the gratuity exceeds ₹20 lakhs or calculated value, gratuity received on death by a nominee/legal heir is fully exempt, as it is not "salary income" for the recipient.

✅ Conclusion:

Gratuity received by legal heir due to employee’s death is 100% exempt from tax.

👉 Where to show:

ITR → Schedule Exempt Income → Section 10(10) – Gratuity receipts

✅ 5. Monthly Pension from Delhi Govt (COVID relief - ₹2,500/month)

Status: This is a COVID-related ex gratia payment from the Government.

As per the CBDT Circular No. 12/2021 and Section 10(10D)/10(10BC):

Any ex-gratia payment received by family members of a deceased person due to COVID from Central/State Government is exempt.

👉 Conclusion:

Fully exempt in hands of widow or child.

👉 Where to show:

ITR → Schedule Exempt Income → Others → Mention as "COVID Relief Pension from Govt under 10(10BC)"

✅ 6. NPS Amount (Received by Nominee)

Status: If the NPS amount was received by the nominee/legal heir after death, it is fully exempt under Section 10(12A).

CBDT has clarified that death-related NPS payouts to nominee are exempt from tax.

👉 Where to show:

ITR → Schedule Exempt Income → Section 10(12A) – NPS closure due to death

✅ Final Summary Table:

Income Type	Taxability	Where to Report in ITR
Savings A/c Balance (from deceased)	❌ Not taxable	Optional: Exempt Income → "Inheritance"
PF Lump Sum (EPF)	❌ Exempt (Sec 10(12))	Exempt Income → Section 10(12)
PF Pension (EPS)	✅ Taxable	Income from Other Sources + Deduction under Section 57(iia)
Gratuity (on death)	❌ Exempt (Sec 10(10))	Exempt Income → Section 10(10)
COVID Govt Pension (₹2,500/m)	❌ Exempt (Sec 10(10BC))	Exempt Income → Others (COVID Relief)
NPS Amount (Nominee)	❌ Exempt (Sec 10(12A))	Exempt Income → Section 10(12A)

🙏 Final Notes:

You should file the ITR as "Legal Heir of [Deceased Name]" if you're filing on their behalf (using "Register as Legal Heir" on the Income Tax portal).
For income in hands of widow/child, they file separate ITRs, declaring only the applicable income they received.
Keep all supporting documents, letters from employers/EPFO/govt bodies.

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Income Tax query support needed for income received on death | COVID

Nikunj Agarwal

Asha Kanta Sharma

🔷 General Note: