Outlook Business Desk
According to Hindu Marriage Act of 1955, Alimony also known as spousal support or maintenance refers to the financial payments a husband provides to his ex-wife after divorce or separation.
In India alimony is regulated by several laws, including the Hindu Marriage Act, Special Marriage Act, Indian Divorce Act, Muslim Women Act and Parsi Marriage and Divorce Act.
In India, the Income Tax Act of 1961 does not explicitly define the taxability of alimony. Therefore, its taxation may depend on how it is categorised including the type of payment and the nature of the asset.
If alimony is received as a in one-time lumpsum payment in cash, it is classified as a capital receipt and it is not taxable.
If alimony is received in regular monthly cash installments, it is considered a revenue receipt and may be taxable under "Income from Other Sources".
If assets like property or stocks are transferred before the divorce, they may qualify as a gift from a relative and be exempt from tax under Section 56(2)(x) of the Income Tax Act. However, after divorce, the transfer may no longer be considered a gift between relatives making it taxable for the recipient.
Either spouse can seek alimony, but it is usually awarded to the financially weaker partner. Before granting alimony courts consider multiple factors such as the financial status of both spouses, their lifestyle during the marriage, the duration of the marriage and child custody arrangements.
A working woman can still be granted alimony if there is a considerable income gap between her and her spouse. However, if she is financially independent, the alimony amount may be lowered or even denied.