Author: Shahnawaz Akhter

Karachi, December 30, 2023 – The Federal Board of Revenue (FBR) has said that the responsibility for filing the income tax return of a deceased person lies with their legal representative.

This announcement aims to dispel any misunderstandings surrounding the obligation to file tax returns in the unfortunate event of an individual’s passing.

Official sources within the FBR emphasized that the misconception suggesting that filing a return of income and assets is not necessary in the case of a person’s death is inaccurate. The FBR maintains that, similar to the transfer of assets to legal heirs, the tax liability also shifts to the legal representatives of the deceased.

Subsection 3 of Section 114 of the Income Tax Ordinance, 2001, empowers the Commissioner of Inland Revenue to issue notices to the legal representatives of deceased persons, mandating the filing of income tax returns.

According to this provision, the Commissioner may, through written notice, require a person or their representative, as applicable, to furnish a return of income within a specified date for a period of fewer than twelve months under various circumstances. These circumstances include, but are not limited to:

(a) Death of the Person: If the person has passed away, the Commissioner can issue a notice to the legal representative to file the income tax return on behalf of the deceased.

(b) Bankruptcy or Liquidation: In cases where the person has become bankrupt or undergone liquidation, the Commissioner retains the authority to request a tax return from the legal representative.

(c) Permanent Departure from Pakistan: If the person is about to leave Pakistan permanently, the Commissioner can issue a notice to ensure that the income tax return is filed before their departure.

(d) Commissioner’s Discretion: The Commissioner also has the authority to require a return to be furnished in situations not explicitly mentioned, deeming it appropriate based on specific circumstances.

This clarification by the FBR aims to streamline the process of handling tax matters concerning deceased individuals and ensure that legal heirs fulfill their obligations in accordance with the tax laws of the country.

Taxpayers and legal representatives are urged to stay informed about their responsibilities and comply with the notices issued by the FBR to avoid any legal consequences. Failure to file the required tax return within the specified timeframe may result in penalties and other legal actions.

The FBR emphasizes its commitment to a fair and transparent tax system and encourages cooperation from the public in fulfilling their tax obligations promptly. This announcement is part of the FBR’s ongoing efforts to enhance tax compliance and ensure a smooth and efficient tax administration process.