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Taxability for husband paying maintenance to estranged wife

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Kunal Shah

Student

24 Points Posted on 02 April 2016

Dear Members,

I have a few queries related to the tax implications for the following stiuation:

Situation:

1. Husband and Wife are staying seperate and are under litigation related to marital disputes.

2. Wife has been awarded maintenance for her survival and daily needs and the maintenance amount is not alimony amount which is usually ordered at the time of divorce.

3. Husband has been paying an amount of Rs 15,000/- as monthly interim maintenance to the non-working wife

Queries:

1. Is husband entitled to deduct the amount of Rs 15,000/- *12 = 180,000/- from his taxable income. If yes, under which section

2. Does wife need to file Income tax returns?

3. Does the husband need to deduct TDS on the monthly interim maintenance amount paid?

Thanks for your help.

Regards,
Kunal

Replies (1)

RAJESH SHARMA

PAST CA FACULTY MEMBER AT NIFA INFOCOMP

104 Points Posted on 07 April 2016

Alimony can be a one-time receipt or a periodic receipt or a combination of both. It is not specifically covered in 'income' as defined under the Income Tax Act, 1961 ('the Act') and there is no specific provision which governs its taxability.

As a general principle, a capital receipt is non-taxable while a revenue receipt is taxable. In an old Mumbai High Court ruling, it was held that monthly alimony, being a regular and periodic return from a decree, would constitute taxable income. In contrast, the lump sum payment received was held to be a capital receipt and, hence, not taxable for the former spouse. This decision was in the context of cash payments and does not deal with assets transferred as a part of the separation.

For the spouse paying the alimony, there is no provision under the tax laws enabling him to claim a deduction towards such payment from his income.