Donating to Family of Deceased | Know the Implications under Income-tax Act
- Blog|Income Tax|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 5 August, 2022
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With an increase in the nationwide cases of COVID-19, people and the Government are coming together to help those in need. Everyone is doing the best that they can to help humanity in this severe pandemic. Many charitable organizations, employers, institutions are providing financial assistance to the family of the deceased. While some people are donating to various organizations to assist the less fortunate, others are giving direct assistance to the patients and the deceased’s family. Donating might give rise to tax liability in the hands of the receiver. This blog has elaborated a few of these aspects.
Amount received in the event of the death
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If received from an individual
Any assistance received by the family of the deceased from any individual, such amount is taxable in the hands of the receiver under the head income from other sources if the amount received exceeds Rs. 50,000 during the year.
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If received from a charitable trust or local authority
If the amount is received from a trust registered under Section 12AA or an institution or hospital as referred to in Section 10(23C), it will not be taxed in the hands of the recipient as such income is specifically excluded from section 56.
Return filing of the deceased
The income tax return of the deceased has to be filed if he has taxable income during the year of his death. For computing taxable income in his hands, income earned until the date of death would be considered. Any income arising after the date of death until the end of the year would be regarded as the legal heir’s income and disclosed in his Income-tax return.
Any amount of donation received in cash or in-kind after the person’s death shall be taxed in the hands of the legal heir. Such income shall be assessed in his hands and taxed at normal tax rates as applicable in his hands.
Legal heir shall file the return on behalf of the deceased with respect to the income assessable in the hands of the deceased. The legal heir shall first request for registration as such on the e-filing portal, and thereafter he would be eligible for filing the return on behalf of the deceased.
Tax liability of the legal heir
The legal heir is liable to comply with all the requirements under the Act, like filing return of income or payment of tax, interest, etc. The liability of the legal representative is limited to the extent to which the estate is capable of meeting the liability. However, the legal representative is personally liable to the extent of the value of any asset of the estate he gets or creates a charge on, while the liability for tax remains undischarged.
Other specific announcements
Provision of Section 269ST has been amended to provide that the hospitals, dispensaries, nursing homes etc., can accept payment in cash of Rs. 2 lakhs or more in case of covid patients. But for this purpose, they would have to provide PAN or Aadhaar of the patient. Relaxation has been provided only with respect to payments made between 01-04-2021 and 31-05-2021.
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Hii Sir.
this is Mithun Jagadev from Puri , I have a doubt please clarify the same, an Assessee had been working in a Pvt company since 14 years, now during Covid pandemic he died while in active service, now company is paying a lumpsum payment around 5 lakhs to the family member of the deseased what will be the tax impact on the hands of the company and the legal heirs of the deseased, Please suggest