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What happens to the income tax liabilities when an individual dies?

Date: 30 Mar 2016    Group: Lawyers    Category: Indian Law   

There may be individuals who have income tax liabilities. What happens in case they die without clearing their income tax dues? Is it recovered from their legal heirs? How the income tax authorities come to know about the death of an income tax payer?
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Searching for information about how income tax liabilities are handled? Wondering what happens after a person dies? Check out answers from experts here.

Author: Venkiteswaran.    31 Mar 2016      Member Level: Diamond     Points : 3  (Rs 3)    Voting Score: 0

The liabilities due to government can be recovered from the assets left by the deceased person. Whoever has inherited and enjoying the assets is also liable to pay the statutory dues on the assets.

Hence if the IT authorities identify and locate the assets, they can start legal proceedings to recover the dues from the assets.

Author: Mahesh    31 Mar 2016      Member Level: Gold     Points : 3  (Rs 3)    Voting Score: 0

Income tax liabilities are recovered from the legal heirs. Most of the business which had partners in such case go through the same. Some of the LLPs and other business model are strictly business based though. So any loss in LLP doesn't lead to liquidating the personal assets of the legal heir.

However if this is personal taxation and property taxation, then the people who legally get inheritance are liable to pay for it. This includes the kids or the foundation or the lawyer. Whoever has the legal right on the property is asked to get the income tax.

Income tax department keep tracks of people who pay taxes. So the death of the person who pays tax in specific tax slab is possible for them to track.

Author: Manoj Chaurasia    31 Mar 2016      Member Level: Gold     Points : 4  (Rs 4)    Voting Score: 0

If law of inheritance is referred, it says that not only all assets but as well as the liabilities will pass down to the legal heir in case of death of a person.

This rule applies to Income tax liability also, since it is a personal liability which passes on to the legal heir in case of death of assessee.
Income tax department will first send intimation with regard to non filing of return on email id (if online filing done), or send a hard copy notice to assessee at the address available with the department. First intimation will mention the time for compliance and if the compliance is not done then the assessing officer of the ward where return is filed will send another notice.

In case there is no compliance from the legal heir then the assessing office may come knocking down your door. Do not underestimate the information network of Income Tax department as they will come to know of your address from bank account details and other means.

The Income Tax department will not come to know of death of assessee, but it has to be intimated his legal heir to the department and pay off all his dues to the department so that the status of the assessee can be written off from the records of Income Tax department.

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