PAN (Tax ID) for the Estate of Deceased in India

January 13, 2021

Santosh Kalra Pawar, Esq.

Legal heirs, NRI’s and Resident Indians alike, always question – Why does "the Estate of Deceased" require it separate PAN (Permanent Account Number)? Who must apply for the same? What are the required supporting documents to obtain PAN for the Estate? Let us examine and Know all about "PAN" for the Estate of the Deceased.

What is PAN (Permanent Account Number) in India?

PAN (Permanent Account Number) is a unique ten-digit alphanumeric identifier (tax ID) issued by the Income Tax Department of India under section 139A of Income Tax Act, 1961, as amended, and Rule 114 of Income Tax Rules.

It is issued to individuals, HUF’s, as well as legal entities, whether Indian Citizens/entities or Foreign citizens/entities, who intend to enter into economic or financial transactions where quoting PAN is mandatory, and who are required to file Income Tax Return.

PAN enables Income Tax Department to link various financial transactions of individuals and legal entities with the department in detecting and preventing tax evasion.

It was first introduced in 1972, and amended in January 2005, where the department began issuing PAN under new series and made it mandatory for individuals and entities to quote PAN in various financial transactions, which include –

• Filing Income Tax Returns;

• Sale or purchase of a motor vehicle;

• Opening bank account;

• Depositing cash exceeding Rs. 50,000 during any one day with a bank;

• Applying for issuance of credit or debit card;

• Sale or purchase of any immovable property for an amount exceeding Rs. 10 lakh;

• Sale or purchase of goods or services of any nature other than those specified for an amount exceeding Rs. 2 lakh per transaction; and

• Payment in cash of an amount exceeding Rs. 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time.

What is Estate of the Deceased?

“The Estate of the Deceased” is a legal entity which gets created automatically upon death of an individual to lawfully transfer his/her assets after paying his/her outstanding debts and liabilities.

The Estate becomes lawful owner of all assets of the deceased upon his/her death and remains owner till it transfers assets in accordance with law.

Who represents the Estate of the Deceased?

“Legal Representative” represents the Estate of the Deceased. The following individual/entity, as defined under section 2(11) of Civil Procedure Code, is a "legal representative" -

a. Who represents the estate of a deceased person in law, i.e.,

• Executor or administrator appointed by the court;

• Executor of Administrator appointed by unanimous agreement of Legal Heirs;

• “Nominee” appointed in individual bank account of the deceased; and

• “Surviving Account Holder” in any “Joint Bank Account” of the deceased which contains “survivor clause”.

("Nominee" and "Surviving Account Holder" are authorized to settle account of the deceased account holder and receive cash of the deceased as "trustee" of the Estate of the Deceased.)

b. Who inter-meddles with any asset of the estate of the deceased; or

c. Upon whom the estate devolves when a party sues or is sued in a representative character.

Why Does "the Estate of the Deceased"

Require its Separate PAN?

"The Estate of the Deceased" is a separate taxable entity covered under "Artificial Juridical Person" under Income Tax Act, 1961.

It owns all assets of the deceased from the date of his/her death till it transfers all assets in accordance with law. All income generated by assets of the deceased is deemed to be income of the Estate of the Deceased, which requires filing of tax return by the Estate. Filing of Tax Return requires PAN.

Besides, the Estate requires its own bank account to undertake financial activities beginning from collecting assets to paying outstanding debts and liabilities of the deceased. None of these financial activities are permissible till the Estate has its own PAN.

Section 168 of Income Tax Act, 1961 mandates the Estate of the Deceased to file its Income Tax Return on ITR-5 with Income Tax Department for all financial years from the year of death of the deceased till distribution/transfer of all assets in accordance with law. are lawfully distributed.

How to Fill Application for PAN for The Estate

(Form 49A/49AA)

Example:

Mr. Ravikant Sharma, citizen of India, died on December 15, 2020. Ms. Sharda Sharma was appointed as “Nominee” in his bank account. Ms. Sharda Sharma intends to settle bank account of Mr. Ravikant Sharma after his death and open separate bank account for the “Estate of Mr. Ravikant Sharma”. She files Application for Pan using form 49A.

Relevant entries on form 49A/49AA shall be as follows:

1. Full Name (Box 1): The Estate of Late Mr. Ravikant Sharma

2. Name on Card (Box 2): The Estate of Late Mr. Ravikant Sharma

3. Date of Birth/Creation (Box 5): December 15, 2020 (Date of Death)

4. Address (Box 7): Residential address of the deceased at the time of his/her

death

5. Address for Communication (Box 8): Address of Legal Representative (Ms. Sharda Sharma)

6. Tele No. & Email ID Details (Box 9): Tel number and Email of Legal Representative (Ms.

Sharda Sharma)

7. Status of Applicant (Box 10): Artificial Juridical Persons

8. Source of Income (Box 13):

Select whichever is applicable: Business, House Property, Other sources etc.

9. Representative Assessee (Box 14): Enter Name of Legal Representative (Ms. Sharda Sharma)

Address of Legal Representative (Ms. Sharda Sharma)

Required Documents for PAN for the Estate

Application for PAN for the Estate is submitted with Income Tax Department or authorized bodies by Legal Representative as Representative Assessee. The following documents are required to be submitted with Application for PAN for the Estate of the Deceased:

• Death Certificate of the Deceased;

• Document showing proof of Date of Birth of the Deceased;

• Document showing appointment as "Legal Representative" i.e.,

a. Court Order appointing applicant as “Legal Representative (Executor,

Administrator, Receiver, etc.), if applicable;

b. Agreement of Estate (Legal Heir Agreement), if applicable;

c. Registered Will, if applicable;

d. Document showing appointment as "Nominee" in bank account of Deceased; if

applicable;

e. Document showing "Surviving Account Holder" in “Joint Account with survivor clause” of

the Deceased, if applicable;

• Document showing proof of Identity for Legal Representative;

• Document showing proof of Address for Legal Representative;

• Document showing proof of Date of Birth of Legal Representative; and

• Two photos of Legal Representative.

To conclude, obtaining PAN for the Estate is mandatory. Legal Representative of the Deceased is required by law to obtain PAN for the Estate of the Deceased immediately upon death of the deceased and prior to undertaking any financial activity on behalf of the Estate.

Non-compliance and non-filing of tax returns may lead to severe penalties for late filing as well as possible prosecution by Income Tax Department of India.

Author: Santosh K. Pawar is managing attorney of Law Firm of Santosh K. Pawar. She is licensed to practice in India and U.S. She specializes in U.S. Immigration and NRI property matters. Her expertise includes consulting on property and transfer of inherited assets in India. For more information and assistance, contact by email at santosh@attorneypawar.com, call at (585) 264-1649 or WhatsApp at (585) 474-0935.