Chapter XVII - Special Provisions Relating to Certain Persons
Section 312
Section 312: taxation of an executor
Section 312 explains how the income earned by a deceased person's estate is taxed while it is being administered - in the hands of the executor(s), kept entirely separate from the executor's own personal tax affairs, and assessed year by year until the estate has been fully distributed to the beneficiaries.
On this page
Need advice on Section 312?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) The income of the estate of a deceased person shall be chargeable to tax in the hands of the executor as an individual, if there is only one executor, or as an association of persons, if the executors are more than one.
(2) For the purposes of this Act, the executor shall be deemed to be resident or non-resident according to the residential status of the deceased person for the tax year in which his death took place.
(3) For the purposes of this section, “executor” includes an administrator or other person administering the estate of a deceased person.
(4) The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of his own income.
(5) Separate assessments shall be made under this section on the total income of each completed tax year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests.
(6) In computing the total income of any tax year under this section, any income of the estate of that tax year distributed to, or applied to the benefit of, any specific legatee of the estate during that tax year shall be excluded; but the income so excluded, shall be included in the total income of the tax year of such specific legatee.
(7) The provisions of section 305 shall, so far as may be, apply in the case of an executor in respect of tax paid or payable by him, as they apply in the case of a representative assessee.
Introduction
An executor is taxed on income of the deceased person’s estate until its assets are distributed to beneficiaries. The executor’s estate assessment is separate from their own income.
Key takeaways
Estate income taxed through executor
The deceased person’s estate income is assessed in the executor’s hands until administration and distribution are complete.
Separate from personal income
The executor’s estate assessment is separate from the executor’s own income assessment.
Year-by-year assessment
A separate assessment covers each completed tax year or relevant part-year during administration.
Who is taxed, and as what status
The income of the estate of a deceased person is chargeable to tax in the hands of the executor - as an individual if there is only one executor, or as an association of persons if there is more than one executor.
"Executor" includes an administrator or any other person administering the estate of a deceased person.
For residential status purposes, the executor is deemed resident or non-resident according to the residential status of the deceased person for the tax year in which death took place.
Kept separate from the executor's own tax affairs
The assessment of an executor under Section 312 is made separately from any assessment on him in respect of his own personal income.
Assessed year by year until distribution is complete
Separate assessments are made under this section on the total income of each completed tax year, or part of a tax year, falling within the period from the date of death to the date the estate is completely distributed to the beneficiaries according to their respective interests.
In computing total income for a tax year, any income of the estate distributed to, or applied for the benefit of, a specific legatee during that year is excluded from the estate's assessment - but that excluded income is instead included in that legatee's own total income for that tax year.
Recovering tax paid, like a representative assessee
Section 305 (the right of a representative assessee to recover tax paid) applies, so far as may be, to an executor in respect of tax paid or payable by him, in the same way it applies to a representative assessee.
Step-by-step flow for taxing a deceased person's estate under Section 312
- 1
Who administers the estate?
Under Section 312(3), "executor" includes an administrator or any other person administering the estate.
- One executor: The estate income is taxed in the executor's hands as an individual (Section 312(1)). Go to step 2.
- More than one executor: The estate income is taxed in their hands as an association of persons (Section 312(1)). Go to step 2.
- 2
Fix the residential status
Under Section 312(2), the executor is treated as resident or non-resident according to the deceased person's residential status for the tax year in which the death took place.
- 3
Identify the assessment periods
Under Section 312(5), separate assessments are made for each completed tax year, or part of one, from the date of death to the date of complete distribution of the estate to the beneficiaries.
- 4
Exclude income given to specific legatees
Under Section 312(6), estate income of a tax year distributed to, or applied for the benefit of, a specific legatee in that year is excluded and is instead included in that legatee's total income.
- 5
Keep it separate from the executor's own income
Section 312(4) requires the estate assessment to be made separately from any assessment of the executor's own income. Section 305 applies, so far as may be, to tax paid or payable by the executor (Section 312(7)).
Practical checklist
Do
- Keep estate income and expenses separate from the executor’s personal accounts.
- Track the date on which estate assets are distributed and the years before completion.
Avoid
- Assume the deceased person’s final return covers all later estate income.
Illustrative example
Worked example: two executors and a specific legatee
Hypothetical facts (illustration only, not a real taxpayer): Mr. Rao, a resident for the tax year of his death, dies on 10 August 2026. His two children are appointed executors. For 10 August 2026 to 31 March 2027 the estate earns an assumed ₹6,00,000 of rent and interest. During that period the executors pay ₹1,50,000 of that income to a niece who is a specific legatee under the will. The estate is not fully distributed by 31 March 2027.
Capacity
There are two executors, so the estate income is taxed in their hands as an association of persons under Section 312(1).
Residential status
Mr. Rao was resident for the tax year of his death, so the executors are treated as resident under Section 312(2).
Period
The first assessment covers the part of the tax year from 10 August 2026 to 31 March 2027. Later tax years are assessed separately until complete distribution (Section 312(5)).
Legatee's share
₹1,50,000 paid to the specific legatee is excluded: ₹6,00,000 − ₹1,50,000 = ₹4,50,000 is assessed on the executors. The ₹1,50,000 is included in the niece's own total income (Section 312(6)).
Separate assessment
The ₹4,50,000 is not added to either child's personal income; it is assessed separately under Section 312(4).
Outcome
- The executors are assessed as an AOP on ₹4,50,000 for the part tax year.
- The niece includes ₹1,50,000 in her own total income for that tax year.
Frequently asked questions
Is a deceased person's estate taxed as an individual or as an association of persons?
As an individual, if there is only one executor; as an association of persons, if there is more than one executor administering the estate.
Is the estate's income mixed with the executor's own personal income for tax purposes?
No - Section 312(4) requires the estate's assessment to be made separately from any assessment on the executor's own personal income.
What happens to income distributed to a specific legatee during administration?
It is excluded from the estate's own assessment for that tax year and instead included in the total income of that specific legatee for that year, under Section 312(6).
Need help applying this provision to your situation?
Get help with estate and executor taxationLast updated 9 October 2026