Section 302 of Income Tax Act 2025: Are Legal Heirs Liable for Income Tax After Death?

Section 302 deals with the tax obligations of a deceased taxpayer's legal representative, including pending assessments, recovery from the estate and exceptional personal liability when estate assets are transferred.

Legal position: The Income-tax Act, 2025 came into force on 1 April 2026. Section 302 corresponds broadly to Section 159 of the Income-tax Act, 1961. Proceedings concerning tax years beginning before 1 April 2026 may remain governed by the 1961 Act under the transitional provisions of Section 536.

What is Section 302 of the Income Tax Act 2025?

When a taxpayer dies, outstanding tax obligations do not automatically disappear. Section 302 establishes the circumstances in which the deceased person's legal representative must meet those obligations. The provision also permits the tax authority to continue or initiate assessment proceedings through the legal representative. Ordinarily, the liability is restricted to the capacity of the deceased's estate to meet the demand, subject to the specific exceptions in the section.

Section 302 explained: seven subsections

Section 302(1): Liability after death

A legal representative is liable to pay amounts that the deceased would have been liable to pay if alive, in the same manner and to the same extent, subject to the statutory limitations explained below.

Section 302(2): Assessment and pending proceedings

For assessment, reassessment or recomputation of the deceased's income, including proceedings under Section 279, the law provides that:

Clause (a): Proceedings already taken against the deceased before death are deemed to have been taken against the legal representative and may continue from the stage reached on the date of death.
Clause (b): Proceedings that could have been taken against the deceased if alive may be taken against the legal representative.
Clause (c): The other provisions of the Act apply accordingly.

Section 302(3): Deemed assessee

For the purposes of the Act, the legal representative of the deceased is treated as an assessee. This allows statutory notices, proceedings and related obligations to operate through that representative.

Section 302(4): Liability generally limited to the estate

Subject to subsections (5), (6) and (7), the representative's liability is limited to the extent to which the deceased's estate is capable of meeting the liability. Merely being a legal heir does not ordinarily make a person liable to discharge the deceased's tax demand from unrelated personal assets.

Section 302(5): Personal liability for disposal of estate assets

Personal liability may arise where, while tax payable in the capacity of legal representative remains unpaid, the representative creates a charge on, disposes of or parts with estate assets that are or may come into their possession.

Section 302(6): Limit on the exceptional personal liability

The liability arising under subsection (5) is limited to the value of the estate asset charged, disposed of or parted with.

Section 302(7): Related representative-assessee provisions

Sections 304(2), 304(5) and 305 apply, so far as possible, to legal representatives to the extent that they are not inconsistent with Section 302. These provisions concern the framework of representative liability and recovery of tax paid.

Key distinction: Liability limited to the estate under subsection (4) is the general rule. Subsections (5) and (6) address a specific situation where a representative deals with estate assets while tax remains unpaid.

Important statutory and legal definitions

Legal representative: A person who in law represents the estate of a deceased person. Section 2(11) of the Code of Civil Procedure, 1908 provides a general procedural definition, including persons who intermeddle with the estate; its application depends on context.

Estate of the deceased: The property, assets and interests left by the deceased which may be available to meet legally enforceable liabilities, subject to applicable law and claims.

Assessee: A person treated as subject to tax proceedings and obligations under the Act. Section 302(3) expressly deems the legal representative to be an assessee for this purpose.

Reassessment or recomputation: Statutory proceedings to reassess or recompute income in cases covered by the Act, including the framework referred to in Section 279.

Example: How much tax can a legal heir be required to pay?

Suppose a taxpayer dies leaving estate assets worth Rs. 8,00,000, and an enforceable income-tax liability of Rs. 12,00,000 is established. If the representative properly preserves and administers the estate, liability under Section 302(4) is generally restricted to what the estate can meet, rather than the representative's independent savings. The actual recoverable amount depends on estate valuation, other legally relevant liabilities and the facts of the case.

If, while the tax remains unpaid, the representative disposes of estate property worth Rs. 3,00,000, subsections (5) and (6) may create personal liability connected to that disposal, limited to the value of the asset concerned. This illustration is simplified and is not a determination of liability in a particular case.

What should a legal representative do after a taxpayer dies?

Preserve the death certificate and records identifying the legal representative and the deceased's estate.
Review the deceased's income-tax returns, notices, assessment orders and outstanding demands.
Use the Income Tax e-Filing Portal's applicable legal-heir registration or representative functionality and respond to notices within prescribed time limits.
Maintain records of estate assets, payments, transfers and distributions.
Seek professional advice before transferring estate property if a tax demand or proceeding is pending.
Check whether the relevant tax year is governed by the 2025 Act or saved provisions of the 1961 Act.

Frequently asked questions

Does income-tax liability end when a person dies?

No. Section 302 permits recovery through the legal representative, subject to its rules and limits.

Must a legal heir pay tax from personal income?

Ordinarily, the liability is limited to the estate's capacity to pay. Personal liability may arise in the specific asset-disposal circumstances described in subsections (5) and (6).

Can an income-tax assessment continue after the taxpayer's death?

Yes. Section 302(2) allows qualifying pending proceedings to continue against the legal representative and permits proceedings that could have been initiated against the deceased.

Which earlier provision corresponds to Section 302?

Section 159 of the Income-tax Act, 1961. For earlier tax years, the transitional rules in Section 536 of the 2025 Act must also be considered.

Official statutory resources

Income-tax Act 2025 (official amended PDF)Income Tax Department: Act and rules Income Tax e-Filing Portal

Updated: 11 November 2026. This article provides general legal information; individual matters require examination of applicable law, notices and estate records.