INCOME OF THE DECEASED PERSON
This query is : Resolved
08 August 2009
MY CLIENT ( SENIOR CITIZEN ) IS IT ASSESSEE HAVING FIXED DEPOSITS WITH BANKS, INVESTMENT IN NSCS, KVPS, ETC., EACH YEAR HE IS REPORTING THE INCOME THE SAID DEPOSITS AS PER THE ACCRUED INTEREST CERTIFICATE OBTAINED FROM THE BANK. INTEREST IN RESPECT OF NSCS & KVPS IS REPORTED AS PER THE TABLE GIVEN IN IT READY RECKONER. HE HAS ALSO INVESTED IN FIVE YEAR TAX SAVING FIXED DEPOSITS IN BANK U/S 80-C OF THE I.T. ACT DURING FINANCIAL YEAR 2007-2008 & 2008-2009. THE ABOVE SAID DEPOSITS WILL MATURE AFTER 3 TO 4 YEARS. NOMINATION FOR THESE DEPOSITS HAVE BEEN MADE TO THE DIFFERENT FAMILY MEMBERS LIKE, WIFE, SON, DAUGHTER, DAUGHTER IN LAW AND GRAND SON ETC.,
HE EXPIRED ON DT; 20-11-08. MY QUERY IS IN WHOSE A/C THE INTREST FROM THE SAID DEPOSIT SHOULD BE REPORTED AFTER HIS DEATH? IS IT NECESSARY TO OBTAIN TWO CERTIFICATE FROM BANK IN RESPECT OF ACCRUED INTEREST ie., FROM 1-4-08 TO 20-11-08 AND FROM 21-11-08 TO 31-3-09.
CAN WE CONTINUE HIS I.T. FILE TILL THE MATURITY OF THE SAID DEPOSITS?
CAN NOMINEE PREMATURELY CLOSE THE TAX SAVING DEPOSIT? IN SUCH A CASE WHAT WILL BE THE POSITION OF EXEMPTION CLAIMED U/S 80-C BY THE DECEASED DURING THE PREVIOUS YEARS? THE BANK WANTS TO DEDUCT TDS ON THE SAID DEPOSITS. CAN NOMINEE FILE FORM 15-G ON BEHALF OF THE DECEASED?
HE EXPIRED ON DT; 20-11-08. MY QUERY IS IN WHOSE A/C THE INTREST FROM THE SAID DEPOSIT SHOULD BE REPORTED AFTER HIS DEATH? IS IT NECESSARY TO OBTAIN TWO CERTIFICATE FROM BANK IN RESPECT OF ACCRUED INTEREST ie., FROM 1-4-08 TO 20-11-08 AND FROM 21-11-08 TO 31-3-09.
CAN WE CONTINUE HIS I.T. FILE TILL THE MATURITY OF THE SAID DEPOSITS?
CAN NOMINEE PREMATURELY CLOSE THE TAX SAVING DEPOSIT? IN SUCH A CASE WHAT WILL BE THE POSITION OF EXEMPTION CLAIMED U/S 80-C BY THE DECEASED DURING THE PREVIOUS YEARS? THE BANK WANTS TO DEDUCT TDS ON THE SAID DEPOSITS. CAN NOMINEE FILE FORM 15-G ON BEHALF OF THE DECEASED?
09 August 2009
return upto 20-11-08 shall be filed in the name of senior citizen and afterthat his authorised represtentative can file return. If bank issue separate certificate then its good otherwise there is no need for separate certificate.
and asked all other question one by one
and asked all other question one by one
10 August 2009
SRI RAVI TANEJAJI, THAN Q FOR YOUR VIEW. MY QUERY CONTAINS VARIOUS QUESTION.
31 July 2024
When dealing with the income and financial matters of a deceased person, especially with fixed deposits, tax-saving instruments, and interest income, it's essential to handle the situation correctly according to the Income Tax Act. Here’s a detailed breakdown addressing your queries:
### **1. Reporting of Interest Income Post-Death**
**a. ** **Income Reporting:**
- **Until Date of Death:** The interest income accrued up to the date of death (20-11-08) should be reported in the income tax return of the deceased for the financial year in which the death occurred. For the financial year 2008-09, the income should be reported up to 20-11-08.
- **Post-Date of Death:** The interest income accrued after the date of death should be reported in the income tax return of the legal heir or nominee who receives the income.
**b. ** **Certificate from Bank:**
- **Separate Certificates:** It is advisable to obtain two separate certificates from the bank — one for the period from 01-04-08 to 20-11-08 and another from 21-11-08 to 31-03-09. This will help clearly demarcate the interest income accrued before and after the death, ensuring proper reporting and compliance.
### **2. Continuation of IT File**
**a. ** **Filing IT Returns:**
- **For Deceased:** The income tax returns should be filed for the financial year up to the date of death. The return should cover the income accrued up to the date of death.
- **Post-Death:** For the remaining period (from the date of death till the end of the financial year), a legal heir or representative should file the tax returns. The returns should cover the income received from investments, including fixed deposits, in the name of the deceased.
**b. ** **Closure of IT File:**
- **No Need for Ongoing Returns:** The tax file of the deceased does not continue beyond the date of death. The legal heir or representative needs to file returns for the period up to the date of death and for any income received thereafter.
### **3. Premature Closure of Tax-Saving Deposits**
**a. ** **Premature Closure:**
- **By Nominee:** The nominee can request the premature closure of tax-saving deposits. However, tax-saving fixed deposits under section 80C of the Income Tax Act have a minimum lock-in period of 5 years.
- **Impact on Exemption:** If the deposit is prematurely closed, the tax exemption claimed under section 80C in previous years may be impacted. The interest income from the deposit should be added to the income of the deceased or the legal heir, and the amount claimed as exemption in the past years might be subject to reversal or additional tax liabilities.
### **4. TDS and Form 15G**
**a. ** **TDS on Deposits:**
- **Deduction:** Banks will deduct TDS on the interest income as per applicable rates. The TDS will be deducted on the income received after the death of the account holder.
**b. ** **Form 15G:**
- **On Behalf of Deceased:** Form 15G cannot be filed on behalf of the deceased person because it is applicable only for individuals who are alive and whose total income is below the taxable limit.
- **Filing by Nominee:** The nominee or legal heir should file the appropriate return and claim the TDS deducted as per the tax laws applicable to the deceased’s income.
### **5. Summary and Key Points**
1. **Interest Income Reporting:** Report interest income up to the date of death in the deceased’s tax return and post-death income in the legal heir’s or nominee’s return.
2. **Bank Certificates:** Obtain separate interest certificates for periods before and after the date of death.
3. **IT File Continuation:** The IT file of the deceased is closed post-death, and the nominee or legal heir manages post-death income.
4. **Premature Closure:** Premature closure of tax-saving deposits affects past tax exemptions. The tax implications should be reviewed with the help of a tax advisor.
5. **Form 15G:** Cannot be filed for deceased individuals. The nominee should address TDS issues through the income tax return.
Handling these matters with precision ensures compliance with tax laws and avoids complications for the heirs or nominees. Consulting a tax advisor or financial planner may also provide further clarity and assist with specific circumstances.
### **1. Reporting of Interest Income Post-Death**
**a. ** **Income Reporting:**
- **Until Date of Death:** The interest income accrued up to the date of death (20-11-08) should be reported in the income tax return of the deceased for the financial year in which the death occurred. For the financial year 2008-09, the income should be reported up to 20-11-08.
- **Post-Date of Death:** The interest income accrued after the date of death should be reported in the income tax return of the legal heir or nominee who receives the income.
**b. ** **Certificate from Bank:**
- **Separate Certificates:** It is advisable to obtain two separate certificates from the bank — one for the period from 01-04-08 to 20-11-08 and another from 21-11-08 to 31-03-09. This will help clearly demarcate the interest income accrued before and after the death, ensuring proper reporting and compliance.
### **2. Continuation of IT File**
**a. ** **Filing IT Returns:**
- **For Deceased:** The income tax returns should be filed for the financial year up to the date of death. The return should cover the income accrued up to the date of death.
- **Post-Death:** For the remaining period (from the date of death till the end of the financial year), a legal heir or representative should file the tax returns. The returns should cover the income received from investments, including fixed deposits, in the name of the deceased.
**b. ** **Closure of IT File:**
- **No Need for Ongoing Returns:** The tax file of the deceased does not continue beyond the date of death. The legal heir or representative needs to file returns for the period up to the date of death and for any income received thereafter.
### **3. Premature Closure of Tax-Saving Deposits**
**a. ** **Premature Closure:**
- **By Nominee:** The nominee can request the premature closure of tax-saving deposits. However, tax-saving fixed deposits under section 80C of the Income Tax Act have a minimum lock-in period of 5 years.
- **Impact on Exemption:** If the deposit is prematurely closed, the tax exemption claimed under section 80C in previous years may be impacted. The interest income from the deposit should be added to the income of the deceased or the legal heir, and the amount claimed as exemption in the past years might be subject to reversal or additional tax liabilities.
### **4. TDS and Form 15G**
**a. ** **TDS on Deposits:**
- **Deduction:** Banks will deduct TDS on the interest income as per applicable rates. The TDS will be deducted on the income received after the death of the account holder.
**b. ** **Form 15G:**
- **On Behalf of Deceased:** Form 15G cannot be filed on behalf of the deceased person because it is applicable only for individuals who are alive and whose total income is below the taxable limit.
- **Filing by Nominee:** The nominee or legal heir should file the appropriate return and claim the TDS deducted as per the tax laws applicable to the deceased’s income.
### **5. Summary and Key Points**
1. **Interest Income Reporting:** Report interest income up to the date of death in the deceased’s tax return and post-death income in the legal heir’s or nominee’s return.
2. **Bank Certificates:** Obtain separate interest certificates for periods before and after the date of death.
3. **IT File Continuation:** The IT file of the deceased is closed post-death, and the nominee or legal heir manages post-death income.
4. **Premature Closure:** Premature closure of tax-saving deposits affects past tax exemptions. The tax implications should be reviewed with the help of a tax advisor.
5. **Form 15G:** Cannot be filed for deceased individuals. The nominee should address TDS issues through the income tax return.
Handling these matters with precision ensures compliance with tax laws and avoids complications for the heirs or nominees. Consulting a tax advisor or financial planner may also provide further clarity and assist with specific circumstances.
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