Outlook Business Desk
Marriage brings a lot of changes to the lives of the bride and groom. In India, these changes also affect their income tax, the taxes on gifts they receive, and how the income earned by their minor child is treated. Let’s break this down.
Gifts received by the bride or groom at their wedding are completely tax-exempt, no matter the value. This rule applies only to the couple. Gifts received by relatives exceeding ₹50,000 in a year are taxable in their hands under Indian tax law.
Tax authorities can scrutinise large marriage gifts, asking for details of wedding expenses, photos or videos, an tax and investment expert told Mint. If the gifts seem unusually high or sources aren’t clear, they may be taxed at a flat 60% along with interest and penalties.
Gifts given to a spouse are tax-exempt, but any income earned from these assets is added to the giver’s income. The same applies to gifts from in-laws. Clubbing provisions stop if the marriage ends due to divorce or the death of a spouse.
Income earned by a minor child, such as interest, dividends or rent, is clubbed with the parent with higher income. Only passive income is included. Exemptions of ₹1,500 per child apply and child’s personal earnings or disability income remain non-clubbable.
When parents separate, a minor’s income is added to the parent who maintains the child. If custody changes through court orders, the clubbing shifts to the parent currently responsible for the child’s financial support during the year.
Lump sum alimony received after divorce is not taxed as it’s treated as a capital receipt. However, periodic alimony payments may be taxable. The person paying alimony gets no tax benefit for either lump sum or regular payments under Indian law.
Divorce impacts tax liability through alimony and the end of income clubbing with a spouse. Gifts and transfers made during marriage may keep their earlier tax treatment, making it important to understand these rules before separation or divorce to manage taxes effectively.
Planning finances carefully around marriage, gifts, minor children’s income and divorce can help lower taxes while staying compliant. Knowing exemptions, clubbing rules and alimony provisions allows taxpayers to make informed decisions on income, transfers and managing assets under Indian tax law.