Section 312 of the Income-tax Act, 2025 — Executor: Assessment of the Estate of a Deceased Person

In plain language

What Section 312 actually says

When a person dies, their income does not simply vanish, and neither do their assets. Until the estate is fully wound up and handed over to the heirs and legatees, someone has to manage it and pay tax on the income it throws off. Section 312 of the Income-tax Act, 2025 is the provision that answers a very practical question: who pays income tax on the income earned by a dead person's estate, and how is that tax computed? The answer is the executor — the person legally charged with administering the estate.

This section is the direct successor to Section 168 of the Income-tax Act, 1961. The wording has been modernised and simplified in the 2025 Act, but the substance is virtually identical. It applies from 1 April 2026, the date the new Act takes effect.

Who it applies to

• The executor — the person named in a will to administer the estate. If there is no will, or no executor is named, an administrator appointed by a court steps in, and any other person actually administering the estate is also covered. Section 312 expressly defines "executor" to include an administrator or other person administering the estate.
• Estates under administration — the section governs the interim period from the date of death until the estate is fully distributed to the beneficiaries. Once distribution is complete, the income belongs to the heirs directly and Section 312 no longer applies.
• Beneficiaries and specific legatees — indirectly, because income handed over to a specific legatee is taxed in that legatee's hands, not the estate's.

How the estate is taxed — the key rules

• Chargeable in the executor's hands: The income of the estate is taxed in the hands of the executor. If there is only one executor, the estate is taxed as if the executor were an individual. If there are two or more executors, the estate is taxed as an association of persons (AOP).
• Residential status follows the deceased: The executor is deemed resident or non-resident according to the residential status of the deceased person in the tax year in which the death occurred — not according to the executor's own status.
• Separate from the executor's own tax: The assessment on the estate is made completely separately from any assessment on the executor's personal income. This means the estate gets its own set of slab rates, its own basic exemption limit, and its own PAN — the executor does not clump estate income with salary or business income.
• Year-by-year assessment: Separate assessments are made for each completed tax year (or part of a year) falling within the period from the date of death to the date of complete distribution.
• Distributed income is carved out: Any income of the estate that is distributed to, or applied for the benefit of, a specific legatee during a tax year is excluded from the estate's total income — and instead included in the total income of that specific legatee. This prevents the same rupee of income being taxed twice.
• Representative-assessee rules apply: The recovery and liability machinery for a representative assessee (Section 305 of the 2025 Act) applies to the executor, so tax on the estate can be recovered from the estate's assets in the executor's hands.

How it interacts with related provisions

• Section 311 (legal representatives): Section 311 deals with the income the deceased earned up to the date of death — the legal representative files that final return and pays tax out of the estate. Section 312 picks up the baton for income the estate earns after death. The two work in sequence.
• Representative assessee provisions (Sections 304–306): An executor is a species of representative assessee; the general rules on liability, rights to recover tax from the estate, and direct assessment of beneficiaries flow through.
• Slab rates and exemption (Section 202 read with the rate schedule): Because a sole executor is taxed "as an individual", the estate enjoys the individual basic exemption and slab rates for that period. Multiple executors are taxed as an AOP.

Practical implications

• The executor should obtain a separate PAN for the estate and file returns for the estate (typically ITR-5 for an AOP, or the appropriate individual form for a sole executor) for each year until distribution is complete.
• Rental income, interest, dividends, capital gains and business income earned by estate assets after death are the estate's income under Section 312 — not automatically the heirs'.
• Careful record-keeping of what was distributed to which specific legatee and when is essential, because those amounts shift out of the estate's return and into the legatee's return.
• A residuary legatee (someone entitled to what is left over) is generally not a "specific legatee"; income relating to the residue continues to be taxed in the estate until final distribution.