Does GST Liability Die With You? Here’s What Legal Heirs Must Know
Does GST Liability Die With You? Here’s What Legal Heirs Must Know
Many individuals in India are confused about what happens to GST liability after the death of a registered taxpayer. Usually, individuals think tax liabilities automatically end when a taxpayer registered under GST (Goods and Services Tax) passes away. However, this is not the reality in India. The GST law says that the pending GST liabilities, such as tax, interest, or penalty, that were due before the person’s death still need to be paid if the person dies. These liabilities do not end just because the person is no longer alive.
Who Is Responsible for Paying the Dues?
If a person registered under GST dies, all GST liabilities shift to his/her legal heirs or legal representatives. The legal heir who inherits assets such as property, money, etc. from the deceased person, the GST dues can only be recovered from those assets. The heir’s personal property or money, beyond inheritance, is not at risk. This rule ensures that legal heirs are not unfairly burdened with someone else’s liabilities.
What Should Legal Heirs Do Immediately After Death of Taxpayer?
Legal heirs or representatives must take some crucial steps once the registered taxpayer dies:
1. File All Pending GST Returns
- Immediately file all pending GST returns (returns due until the person’s death). This includes monthly or quarterly returns, depending on the type of taxpayer.
2. Clear Outstanding Dues from the Estate
- Paying anything beyond what you inherited is not at risk using the assets you inherited from the deceased person.
3. Apply for Cancellation or Amendment of GST Registration
- File Form REG-16 to cancel the GST registration if the business owned by the deceased person is going to end after his/her death. If the business will continue even after the death of the owner, the heir should then either amend the existing registration to update ownership details or apply for a fresh GSTIN in their own name or in the name of the new business entity.
Key Takeaway for Legal Heirs
The GST Department is not allowed to recover more than what was inherited from the deceased person. If the legal heir did not inherit anything, then he/she is not personally liable for the deceased person’s dues. Additionally, no new GST liability can continue unless the deceased person’s business continues and the legal heir runs it. In this case, merely the new transactions done by the legal heir will be taxed under GST, and the heir is responsible for those under a new, changed GST registration.