Representative Assessee, Agent and Legal Representative under the Income Tax Act 2025 (Sections 302-306)

Under the Income Tax Act 2025, some people are taxed through someone else. A guardian, trustee, receiver, agent of a non-resident or the legal representative of a person who has died can be assessed and made to pay. A representative assessee (section 303) is assessed in his own name but only in his representative capacity (section 304(1)(a)). A legal representative (section 302) is liable only up to the value of the deceased's estate, unless he parts with estate assets while tax is unpaid.

This guide covers sections 302 to 306: who falls in each group, how far the liability goes, and how a representative can recover what he pays. The text is the Act as amended by the Finance Act 2026. The Rules do not prescribe any separate form or date for these sections, so everything below comes from the sections themselves.

Who is a representative assessee under the Income Tax Act 2025?

Section 303(1) lists five types of representative assessee. Each is tied to one stream of income, not to the person's own income.

Section 303(1)	Income of	Representative assessee
(a)	A non-resident, for income specified in section 9	The agent of the non-resident, including a person treated as agent under section 306
(b)	A minor, or a person who is mentally ill or of unsound mind	The guardian or manager who is entitled to receive, or is in receipt of, the income on that person's behalf
(c)	Anyone, where income is received by a court-appointed or official manager	Court of Wards, Administrator-General, Official Trustee, or any receiver or manager appointed by or under a court order, including a person who in fact manages property for another
(d)	A beneficiary of a trust declared by a written instrument	The trustee or trustees (includes a valid wakf deed)
(e)	A beneficiary of an oral trust	The trustee or trustees

Section 303(4) adds that every representative assessee is deemed to be an assessee for the purposes of the Act. That makes the representative a person against whom notices, assessments and recovery can run.

What is the difference between a written trust and an oral trust?

An oral trust, under section 303(3), is one that is not declared by a duly executed written instrument and is not treated as written under section 303(2). A trust without a proper deed is treated as written if the trustee or trustees send the Assessing Officer a signed statement of four things: the purposes of the trust, particulars of the trustees, the beneficiaries, and the trust property.

The statement must reach the Assessing Officer within three months of the date the trust was declared. For trusts declared before 1 June 1981, the three months run from that day (section 303(2)(a) and (b)).

What does a representative assessee have to do and pay?

Section 304(1) puts the representative in the same position as if the income were his own: same duties, responsibilities and liabilities. In practice:

• He is assessed in his own name for that income, but the assessment is deemed made on him only in his representative capacity (section 304(1)(a)).
• Tax is levied and recovered from him in the same way and to the same extent as it would be from the person he represents (section 304(1)(b)).
• For that income he cannot be assessed under any other provision of the Act (section 304(2)).
• The Assessing Officer can still assess the beneficiary or the person represented directly, or recover the tax from that person (section 304(3)).
• The Assessing Officer has the same remedies against all property vested in, or under the control or management of, the representative as against any taxpayer's property. This holds whether the demand is raised on the representative or on the beneficiary (section 304(5)).

Where only part of a trust's income is chargeable, section 304(4) fixes the share of a beneficiary's receipts that is chargeable by a formula using three values: A, the chargeable part of the trust's income; B, the whole income of the trust; and C, the income receivable by the beneficiary. The formula itself is shown as a graphic in the Act, so check the official text for it.

Who counts as an agent of a non-resident?

Section 306(1) says "agent", in relation to a non-resident, includes:

• a person in India employed by or on behalf of the non-resident;
• a person in India who has a business connection with the non-resident;
• a person in India from or through whom the non-resident receives income, directly or indirectly;
• a person in India who is the trustee of the non-resident; and
• any other person, resident or not, who has acquired a capital asset in India by a transfer.

"Business connection" has the meaning in section 9(9)(a) (section 306(4)). The word "includes" means the list is not closed.

When is a broker in India not treated as an agent?

Section 306(2) protects a broker who does not deal directly with or for a non-resident principal, but deals with or through a non-resident broker. The broker is not an agent for those transactions if both conditions hold: the transactions are carried on in the ordinary course of business through the first broker, and the non-resident broker acts in the ordinary course of his business and not as a principal.

Can I be treated as an agent without being heard?

No. Under section 306(3), a person is not treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer about that liability.

What happens to tax when a person dies?

Section 302(1) makes the legal representative liable to pay any sum the deceased would have owed, in the same manner and to the same extent as the deceased. Section 302(2) then carries the process across:

• a proceeding pending against the deceased is deemed to be against the legal representative and continues from the stage it had reached on the date of death (302(2)(a));
• a proceeding that could have been taken against the deceased can be taken against the legal representative (302(2)(b)); and
• all provisions of the Act apply accordingly (302(2)(c)).

These rules apply for making an assessment, including assessment, reassessment or recomputation under section 279, and for levying any sum on the legal representative. The legal representative is deemed an assessee (section 302(3)). Section 302(7) also applies sections 304(2) and 304(5) and section 305 to a legal representative, so the remedies against property and the right to recover or retain tax paid (below) are available in the same way. The Act does not define "legal representative" in these sections, so who qualifies depends on the facts and general law.

How far is a legal representative personally liable?

Section 302(4): liability is limited to what the estate of the deceased can meet. The exception is section 302(5). If a legal representative creates a charge on, disposes of, or parts with assets of the estate in or coming into his possession while the tax stays unpaid, he is personally liable for the tax payable by him in that capacity. Under section 302(6), that personal liability is limited to the value of the asset so charged, disposed of or parted with.

Worked examples with figures

Example 1: estate smaller than the tax demand. Assume Mr. Sharma dies and, for tax years up to his death, the assessed tax demand is Rs 8,00,000. His estate (assets that came to the legal representative, his son Ravi) is worth Rs 5,00,000, and Ravi has not charged or disposed of any of it.

Step	Figure
Tax the deceased would have owed	Rs 8,00,000
Estate capable of meeting the liability	Rs 5,00,000
Ravi's liability under section 302(4): lower of the two	Rs 5,00,000
Balance not recoverable from Ravi in this capacity	Rs 3,00,000

Example 2: estate asset sold while tax is unpaid. Same facts, but Ravi sells a flat from the estate for Rs 40,00,000 before the Rs 8,00,000 is paid. He distributes the proceeds among the heirs. Section 302(5) makes him personally liable for tax payable by him as legal representative, up to the value of the asset he parted with (section 302(6)).

Step	Figure
Tax payable by Ravi as legal representative	Rs 8,00,000
Value of the asset he parted with	Rs 40,00,000
Cap on personal liability, section 302(6)	Rs 40,00,000
Amount Ravi is liable for	Rs 8,00,000 (the tax is below the cap)

The practical point: once a notice or demand exists, selling estate assets before settling it moves the risk from the estate to Ravi's own pocket.

Example 3: a guardian and a minor's income. Meena is guardian of her nephew, who is a minor and receives Rs 2,40,000 a year as rent from a property left to him. Under section 303(1)(b) Meena, who receives that income on his behalf, is a representative assessee for it. She is assessed in her own name for that rent, in her representative capacity only (section 304(1)(a)), and cannot be assessed on the same income under any other provision (section 304(2)). Her own salary is a separate matter and is assessed in the usual way.

Example 4: an Indian company paying a foreign consultant. A Pune company pays a non-resident consultant for services that are chargeable in India. The company is a person in India from whom the non-resident receives income, so it can be treated as his agent under section 306(1)(a)(iii). Before the Assessing Officer treats it that way, the company must be heard (section 306(3)).

Can a representative recover the tax he paid?

Yes. Section 305 gives a representative assessee these rights:

• recover from the person he acts for any sum he paid under the Act, or retain an equal amount out of money in his hands in that capacity (305(1));
• retain from money payable to the principal a sum equal to his estimated liability under this Chapter. A person who only apprehends being assessed as a representative assessee has the same right (305(2));
• if the principal disagrees about the amount to retain, obtain a certificate from the Assessing Officer stating the amount to retain until the liability is finally settled. The certificate is his warrant for retaining it (305(3)); and
• be protected on final settlement: the amount recoverable from him cannot exceed the certificate amount, except to the extent he holds additional assets of the principal (305(4)).

Example 5: retention with a certificate. Assume the Pune company owes the consultant Rs 6,00,000 and estimates its agent-related liability at Rs 1,50,000. The consultant disputes that estimate. The company obtains a certificate from the Assessing Officer for Rs 1,50,000 and pays Rs 4,50,000 (6,00,000 minus 1,50,000), retaining Rs 1,50,000 until final settlement. If the final liability is Rs 2,00,000, the most that can be recovered from the company is Rs 1,50,000, unless it holds other assets of the consultant that cover the extra Rs 50,000.

Legal representative, representative assessee and agent: what is the difference?

The three labels overlap, so people mix them up. A legal representative steps into a dead person's shoes. A representative assessee acts for a living person or a trust beneficiary. An agent is one kind of representative assessee, for a non-resident only.

Point	Legal representative	Representative assessee	Agent of a non-resident
Acts for	A deceased taxpayer	Minor, person of unsound mind, trust beneficiary, or a non-resident	A non-resident
Main section	302	303 and 304	306 (feeds 303(1)(a))
Liability limit	Estate value (302(4)), personal if assets are parted with (302(5))	Same extent as the person represented (304(1)(b))	As a representative assessee, for the non-resident's income
Hearing before being named	Not stated in section 302	Not stated in section 303	Required (306(3))
Right to recover or retain	Yes, via 302(7)	Yes (305)	Yes (305)

The old Act had a similar scheme in its Chapter XV; the 2025 Act renumbers it into sections 302 to 306, and the text above is what applies from 1 April 2026.

Quick reference

Question	Answer	Provision
Is a representative assessee a deemed assessee?	Yes	303(4), 302(3)
Can the principal be assessed directly?	Yes, at the Assessing Officer's option	304(3)
Limit on a legal representative's liability	Value of the estate	302(4)
When does a legal representative become personally liable?	Disposes of or charges estate assets while tax is unpaid; capped at the asset's value	302(5), (6)
Does a pending proceeding survive death?	Yes, continued against the legal representative	302(2)(a)
Is a hearing needed before being treated as agent?	Yes	306(3)
Can a representative withhold money from the principal?	Up to estimated liability, with a certificate if disputed	305(2), (3)
Time to send the signed statement for an unwritten trust	Three months from declaration (1 June 1981 for older trusts)	303(2)

What are the common mistakes?

• Assuming death ends the proceeding. A pending assessment continues against the legal representative from the same stage (section 302(2)(a)).
• Distributing the estate before settling tax. Parting with estate assets while tax is unpaid creates personal liability up to the asset's value (section 302(5), (6)).
• Skipping the trust statement. An unwritten trust that does not file the signed statement within three months stays an oral trust (section 303(2), (3)).
• Assuming the representative's liability replaces the beneficiary's. The Assessing Officer can still assess the beneficiary directly (section 304(3)).
• Paying a non-resident in full without a thought for section 306. A payer in India can be treated as agent, so keep a record of the retention right under section 305.
• Treating the retention as unlimited. The right is to retain an estimated liability, and a disputed amount needs the Assessing Officer's certificate (section 305(2), (3)).

Where this is in the Act

• Section 302: legal representative, estate limit and personal liability
• Section 303: who is a representative assessee; written and oral trusts
• Section 304: liability of a representative assessee; remedies against property
• Section 305: right to recover or retain tax paid
• Section 306: who may be regarded as agent of a non-resident
• Related: section 9 (income deemed to accrue in India) and section 279 (reassessment or recomputation)

For the related withholding rules on payments abroad, see TDS on payments to non-residents under the Income Tax Act 2025. For a withholding example on a domestic payment, see TDS on rent.

How can CA firms keep track of these cases?

Deceased-client files, trust clients and non-resident clients usually run for years and carry several open proceedings. Finexo's practice management software lets a CA firm keep notices, due dates and tasks for each such file in one place. It does not assess liability or file returns for you.

This article explains the Income Tax Act 2025 (as amended by the Finance Act 2026). It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.