Tax rebate on alimony

A. In your case monthly payments should be taxable where as lump sum may be treated as capital receipt. However, important to note that if the settlement is as per court the Revenue authorities will not raise question. If the settlement is out of court the Revenue authorities as is the nature may raise the question regarding the taxability of Lump sum payments. Therefore, it is better to get the stamp of Court in case of settlement.

B. Coming to your specific question, the Bombay High Court in ref.: Princess Maheshwari Devi of Pratapgarh v. Commissioner of Income-tax [147 ITR 258 (Bom)] answered the two questions raised before it’

(1) Whether, alimony received by the assessee under section 25 of the Hindu Marriage Act, 1955, on nullity of marriage, is income in her hands and liable to tax ?

The Court held: “No”

(2) Whether, on the facts and in the circumstances of the case, the alimony of Rs. 750 per month received by the assessee from her ex husband on the nullity of marriage is income in her hands liable to tax?

The Court held: “The amount of Rs. 750 per month is what the assessee periodically and regularly gets and is entitled to get under this decree. This amount must, therefore, be looked upon as a return from the said decree which is the definite source thereof. The word " return ", in our view, in a case like this, can never be interpreted as meaning only a return for labour or skill employed on capital invested. Such a definition of " return " would be too narrow and would exclude the case of voluntary payments, when it is the settled position in law that in some cases even voluntary payments can be regarded as " income ". Although it is true that it could never be said that the assessee entered into the marriage with any view to get alimony on the other hand, it cannot be denied that the assessee consciously obtained the decree and obtaining the decree did involve some effort on the part of the assessee. The monthly alimony being a regular and periodical return from a definite source, being the decree, must be held to be "income" within the meaning of the said term in the said Act.”

To sum up; a one-time settlement towards divorce is considered a capital receipt and is, therefore, exempt from tax. A recurring monthly payment will, however constitute income and be taxed accordingly.

Dear Sir.. Than ks for your answer

If the settlement is not 1 time.. Actually i am paying the amount in 3 installments (2 lakh, 3lakh and  5 lakh in a time gap of 3 months each) and this is a mutual settlement and not linked to court..

Since I am paying this amount from my income, so can i reduce this from my income while paying for tax ??

Sir, I have already given correct position of Law. My answer for the purpose of this thread may not change by putting Jennie in a bottle or in a tea cup!. Rest it is for any of my my ld. brothers here to re-invent the wheel and I may then consider taking a joyride!

PS.:
[Jennie = back breaking payment that generic husbands meet out to their wife to seek their freedom J
bottle = one time
tea cup = as in installments post decree as in continuous tense]

But the answer remains elusive to most of the readers, sorry.

Here the queriest wants to know the tax liability at THE HANDS OF HUSBAND n NOT AT THE HANDS OF WIFE.

As per my knowledge, such alimony is not exempt in any way for the husband's IT purpose. It will be treated as if he has GIFTED it out.

Thanks Rajiv Ji And Tajobsindia

My query was about the tax rebate for husband.. i think i can't get any rebate for this

As per my knowledge husband has to pay tax for the alimony amonut.Wife does not have to pay tax for the same money.

Acha raw-nee ...... How do you know that ???

Indian Tax code has no provision to take take tax deduction for alimony.  Ofcourse, many countries have this provision.  Taxes are already paid by the husband on his total earnings.  This is one another instances of the biased laws in India, but the alimony amounts are much smaller compared to the countries where tax deduction is provided.

Shonee Kapoor ne ek thread mein bataya tha beti(?)!

rajiv_lodha   is absolutely right

kaun Rajiv?