Section 302 of the Income-tax Act, 2025 — Legal Representative and Liability of a Deceased Person's Estate

In plain language

What Section 302 actually means

When a taxpayer dies, his income-tax dues do not die with him. Section 302 of the Income-tax Act, 2025 lays down the rule that the legal representative of the deceased steps into the shoes of the dead person and becomes responsible for paying any tax, interest, penalty or other sum that the deceased would have had to pay had he lived. This provision is the direct successor to the well-known Section 159 of the Income-tax Act, 1961 and carries the same principle forward almost word for word.

The word "legal representative" carries the same meaning as in the Code of Civil Procedure, 1908 — broadly, a person who in law represents the estate of a deceased person, and includes an executor, administrator, or any heir who intermeddles with (takes possession of / deals with) the estate.

Who it applies to

• Legal heirs — sons, daughters, spouse, parents who inherit the estate.
• Executors and administrators named in a Will or appointed by a court.
• Any person who intermeddles with the estate of the deceased — for example, someone who takes control of the deceased's bank accounts, property or business.

The key sub-sections (in plain English)

• Liability to pay (sub-section 1): The legal representative must pay whatever the deceased would have been liable to pay, "in the like manner and to the same extent" as the deceased.
• Continuation of proceedings (sub-section 2): Any assessment, reassessment, recomputation, penalty or recovery proceeding that could have been taken against the deceased can be started fresh against, or continued against, the legal representative from the exact stage it had reached on the date of death. The representative is treated as if he were the assessee.
• Deemed assessee (sub-section 3): The legal representative is deemed to be an assessee for all purposes of the Act — so notices, appeals and assessments are validly made in his name (as representative).
• Limited liability (sub-section 4): Very importantly, the representative's liability is limited to the value of the estate that has come into his hands. He does not have to pay the deceased's tax out of his own pocket.
• Personal liability on wasting the estate (sub-sections 5 & 6): The protection above is lost if, while tax remains undischarged, the representative creates a charge on, disposes of, or parts with any assets of the estate. To that extent he becomes personally liable — but only up to the value of the assets so charged, disposed of or parted with.

How it interacts with other provisions

• It works alongside the rules on representative assessees and the machinery for recovery of tax. Interest and penalty that had accrued against the deceased pass through as part of the "sum" payable.
• Practically, the representative must register as a legal heir on the income-tax e-filing portal (incometax.gov.in) and file the deceased's final return for income earned up to the date of death; income earned by the estate after death is dealt with separately.

Practical implications for families

• File the deceased's return promptly to close the tax file and avoid interest under the interest provisions.
• Do not distribute or sell estate assets until you have ascertained and provided for the tax dues — otherwise you risk personal liability under sub-sections (5)/(6).
• Keep valuations and records of the estate; your liability can never exceed the estate value (unless you wasted assets).