Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARD :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: form 3cd :: ACCOUNTING STANDARDS :: VAT Audit :: TDS :: cpt :: articles on VAT and GST in India
 
 
Direct Tax »
 No change in gold seizure norms in proposed I-T Law amendments
 Direct tax collection will get a long-term boost, Franklin Templeton says
 I-T Act amendments upset calculations of cash hoarders
 Claim tax benefit on costs incurred to evict tenants
 The Integrated Goods And Services Tax Act, 2016
 Here’s what Income Tax Department did leading up to demonetisation
 I-T department asks IDS declarants to pay tax by November 30
 Cash trove tax drive dilemma
  CBDT halves Income Tax refunds issue timeline to 15 days for this fiscal
 CBDT signs four unilateral advance pricing agreements
 Central Board of Direct Taxes allowed Rs 4,500 crore of irregular benefits to infrastructure companies: CAG

Dead continue to pay tax, RTI query finds
October, 05th 2012

Delhi resident Madan Kumari Jain is a conscientious citizen. She earns a steady income and pays her taxes religiously. In 2010-11, she paid Rs 2.01 lakh in tax. A year before that, she enriched the income tax department by Rs 2.05 lakh. In fact, she has made the exchequer richer by a million rupees in the past five years. Nothing unusual except for the fact that Jain died in 2007.

A query under the Right to Information Act has revealed that many dead Indians continue to pay income tax.

In Mumbai, a unit of the IT office received Rs 4.05 crore as tax from dead assessees in the past five years. In the same period, a Ranchi unit received Rs 27 lakh from seven deceased tax payers. The IT office in Allahabad has two dead taxpayers on its rolls and Porbunder 13. The income tax office allows a legal heir or the executor of a will to settle tax liabilities on behalf of a deceased person, but does not place a cap on the number of years a dead person's tax file can be kept active.

"We do not have information on the system about such cases," said Krishna Rao, commissioner of the central processing centre of the IT department, Bangalore.

The RTI query about dead people filing tax returns was filed by activist Rajiv Singhal, a former president of the Bharat Merchants' Chamber, in March with all IT circles in India. He received 1,150 replies, with IT officials acknowledging in most cases that they were aware of the practice, but did not have information about taxes being paid on behalf of dead people. While a few IT offices gave precise information, others refused to part with data, saying it was not in public interest.
Singhal said, "With computerization, the IT department must distinguish dead tax assesses from the ones who are alive. Several people are taking benefit of the tax exemption (sic) for years on end." For instance, P Kedia, a cloth manufacturer in Mulund, lost his father in 1990. But he continued to pay taxes for his dead dad for a full decade. There are two benefits that apparently accrued to Kedia: one, his tax liability as the legal heir did not balloon suddenly because his father died; two, he could avail of the standard tax deduction on his father's income too.

A merchant from Kanpur said, "Like my father, I have drawn up my will in such a way that my income will not be officially added to that of my two children. But they will have the power to use the money the way they want."

His will lays down a slow process of 50 years through which his assets will be disposed of after his death. Till then, his children and grandchildren will enjoy their gifts.

The deceased, it may be clarified, cannot earn a salary or any other emoluments-for obvious reasons. They can simply earn income on investments in the form of interest or even profit on stock.

What the law says

Section 159 of the Income Tax Act says that when a person dies, his/her legal representatives shall be liable to pay any sum that the deceased would have been liable to pay if he/she had not died, in a like manner and to the same extent as the deceased.

In case a person dies without transferring his/her estate (for instance, a fixed deposit and income from it, which is taxable) the legal representatives continue to file returns till the estate is transferred. Once the estate is transferred, the person who gets it files returns on taxable income earned from the estate.

If a legal representative files tax returns on behalf of a deceased person to claim tax deductions or incentives without disclosing that the assessee has died, it amounts to fraud.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Portfolio

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions