Archive · 16 Nov 2025
Taxation of Income for Assets of a Deceased Person Who Died Intestate
Imagine someone passes away without leaving a will.
If they owned things like money in the bank or stocks, that money can still earn more money, like interest or dividends.
The government still wants to tax this extra money.
If someone is in charge of handling the deceased's things (like an executor), they might pay the taxes.
But if no one specific is in charge, and there are heirs who will get the assets later, those heirs might have to pay taxes on the money their share earns.
They would pay these taxes in their own names, based on how much they are supposed to inherit.
This happens even if it takes a long time for the assets to officially become theirs.
The taxes are for the income earned after the person died but before the assets are given to the heirs.
In case of death without a will (intestate), the legal representative is responsible for the deceased's tax liability.
If an executor is appointed, they are taxed on the estate's income from death until distribution to beneficiaries.
For heirs of someone who died intestate without an appointed executor, income earned after the death may be taxed in their hands proportionally.
This taxation of post-demise income applies regardless of pending asset transmission.
Interest and dividends earned are taxed under the head "Income from Other Sources".
- Who
- Legal heirs of a deceased person who died intestate, and the legal representative.
- What
- Taxation of income (interest, dividends) generated from assets after the owner's death but before the assets are legally transferred to the heirs.
- When
- From the date of demise until the date of complete distribution of the estate to beneficiaries.
- Where
- The taxation occurs within the Indian Income Tax Act framework.
- Why
- To ensure tax liabilities are met for income generated from an estate, even during the legal process of asset transmission.
- Tax Liability of Deceased
- Legal representative is liable for taxes the deceased would have paid.
- Executor's Role
- Executor taxes income of the estate until distribution to beneficiaries.
- Post-Demise Income Taxation
- Subsequent incomes may be taxed in the hands of legal heirs proportionally.
- Tax Head for Interest/Dividends
- "Income from Other Sources"
- Tax Professional's Affiliation
- Parizad Sirwalla, KPMG in India