Alimony Taxable Rules: A significant amount of alimony is often paid during a divorce between a husband and wife. Sometimes, this amount can range from 50-60 lakh rupees to even crores.
Therefore, anyone receiving an alimony payment inevitably wonders whether this amount will also be taxable. Let’s find out what the law says on this matter.
Regarding this, tax expert Balwant Jain explained that when a lump sum payment is made as alimony on a court order, it is not taxable. This amount is called a capital receipt. In a case, Princess Maheshwari Devi of Pratapgarh v. CIT, the Bombay High Court clearly stated that alimony is not taxable because it is not income but a settlement amount.
Is there any monthly maintenance tax?
There are two types of alimony: lump sum and monthly. Lump sum alimony is not taxable, but the rules for monthly maintenance are slightly different. For example, if the husband pays monthly maintenance after divorce, this amount is taxable. According to income tax rules, the wife must add the monthly maintenance to her income and pay tax. This is because this amount is received repeatedly every month. However, if the husband pays money for the children’s expenses, it is not taxable.
Some people are under the misconception that if a husband pays his wife alimony after divorce, he may receive some income tax relief. However, this belief is completely wrong. Whether the alimony is paid in lump sum or as monthly maintenance, the husband does not receive any tax deduction on this payment.
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