Just because somebody has passed away, it doesn’t mean their income tax issues have been automatically resolved. If the deceased had any income exceeding the basic exemption limit and did not file any income tax return (ITR), or has pending tax proceedings or outstanding tax dues, their legal heir(s) may have to take care of it. Sometimes, figuring out who the legal heirs are can be tricky due to family disputes or other reasons.
In such cases, the jurisdictional income tax assessing officer (AO) should be informed of this. If there are no legal heirs, then the person who inherits the properties and other assets of the deceased is responsible for handling the deceased’s income tax dues.
But what happens if the Income Tax Department issues a notice after the taxpayer has died? Can the legal heir be held responsible for the deceased person’s tax dues? Here’s what the rules say.
Can the Income Tax Department issue a notice in the name of a deceased taxpayer?
Once the Income Tax Department knows, or ought reasonably to know, that a taxpayer has died, it cannot validly issue a fresh notice in the deceased person’s own name.
“However, proceedings which were ongoing against such a deceased person at the time of death can be continued against the legal representative of the deceased person,” says Ashish Mehta, Partner at Khaitan & Co.
While there is no statutory obligation for the legal heir to inform the tax officer about the taxpayer’s death, the legal heir should register as the deceased taxpayer’s legal representative on the income-tax e-filing portal.
If the tax department issues a fresh notice in the deceased taxpayer’s name after being aware of the death, there may be grounds to challenge its validity, he adds.
What happens if a taxpayer dies before filing the ITR?
Under Section 302 of the Income-tax Act, 2025, a deceased person’s tax liability does not end with death.
“It passes to the “legal representative”, typically, the executor or administrator of the estate, and in the absence of one, the heir who inherits the estate,” says Rahul Charkha, Partner, Economic Laws Practice.
Whoever holds that status must file the return, covering the period from the start of the relevant financial year up to the date of death (the “date-of-death return”). If the person dies before filing the return for the prior year, the legal representative must file that outstanding return as well, he explains.
According to CA Hitesh Jain, Partner – Direct Tax, N A Shah, Associates, the legal heir should:
- Register on the e-filing portal as “Legal Heir” (Authorised Representative → Register as Representative), uploading the death certificate, PAN of the deceased and legal heir, and legal heir proof (succession certificate, will, or the portal’s affidavit format where formal succession documents are unavailable).
- Approval by the jurisdictional AO/CPC is required before the LR can e-verify or file on the deceased’s behalf.
- File within the normal due date/extended due date applicable to the deceased’s status for that AY; if death occurs very close to the due date, a reasonable-cause plea under Section 119(2)(b) condonation may be needed for delay.
- Reconcile Form 26AS/AIS/TIS, bank statements and capital gains data before filing, since post-death income (e.g., interest accruing after death) belongs to the estate/beneficiaries and is not to be included in the deceased’s return.
Who is responsible for paying the deceased taxpayer’s outstanding tax?
The legal representative is responsible for paying the deceased taxpayer’s outstanding tax liability, but only out of the deceased’s estate and to the extent that the estate can meet the liability.
“If the legal representative creates a charge on, disposes of, or parts with estate assets while the tax liability remains undischarged, he or she becomes personally liable — but even then, only up to the value of the assets so disposed of,” says Mehta.
Therefore, legal heirs should not distribute or transfer the deceased’s assets without first considering outstanding tax liabilities.
What should a legal heir do after receiving an income tax notice for a deceased taxpayer?
The first step is to register as the deceased’s legal representative on the income tax e-filing portal using the death certificate, the PAN details of both the deceased and the representative, and proof of the representative’s status.
“Once approved, the heir should log in, access the notice to understand its nature (for example, a scrutiny notice, reassessment notice, demand notice, or request for information) and note the deadline for responding to it,” explains Charkha.
The legal heir should then check when the notice was issued and in whose name it was issued.
If the notice was issued for the first time after the taxpayer’s death and is addressed to the deceased, there may be grounds to challenge its legal validity rather than simply complying with it.
However, if the notice was validly issued while the taxpayer was alive, or if the department issues a fresh notice addressed to the legal representative, the legal heir may need to participate in the proceedings, explains Mehta.
The legal heir may have to:
- Register as the deceased taxpayer’s legal representative on the e-filing portal.
- Respond to the notice within the prescribed deadline.
- File the return or submit the documents requested by the tax department, wherever applicable.
- Participate in the proceedings as the legal representative.
Legal representatives must be aware that their liability is restricted to the value of the deceased’s estate.
A taxpayer’s death does not automatically close their tax matters. Legal heirs may have to file pending returns, respond to valid proceedings and settle tax dues from the deceased’s estate.
However, they should first check when the notice was issued, in whose name it was issued and whether the proceedings were already pending at the time of death before deciding how to respond.
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