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CS Executive · Tax Laws and Practice · Basic Concept of Income Tax

Mr. Rao died in November of a tax year while a resident. His estate is administered by two executors, who earn Rs. 6,00,000 from the estate in the following tax year, and none is distributed to a specific legatee. Which statement is correct under the Income-tax Act, 2025?

With two executors, the estate income is taxed in their hands as an association of persons, and they are deemed resident or non-resident according to the deceased's status for the tax year of death. Mr. Rao was resident, so the executors are treated as resident.

  1. AThe executors are assessed as an association of persons and are deemed resident or non-resident according to Mr. Rao's status for the year of deathCorrect
  2. BThe executors are assessed individually, each on half of the income, with status determined by their own residence
  3. CThe estate income is exempt until complete distribution to beneficiaries
  4. DThe executors are assessed as an individual since the deceased was an individual, regardless of their number

Explanation

Under section 312, estate income is taxed in the hands of one executor as an individual, or of multiple executors as an association of persons. Their residential status is deemed to follow the deceased's status for the tax year of death. Here there are two executors, so an AOP with resident status applies. Assessment is separate from their own income.

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