ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Alimony in India is not taxed if it is paid as a lump-sum amount in the form of cash. However, if it is received every month, it becomes taxable income. Furthermore, the spouse who provides the amount as alimony cannot claim any tax deduction for this amount, either.

Detailed explanation-2: -Alimony is financial support that the court directs to the husband to pay his spouse after the divorce. In case, the spouse doesn’t have adequate means to lead a life after the divorce or don’t associated with earning through any profession, alimony is granted to the spouse.

Detailed explanation-3: -In case of a lump sum payment of alimony: Here, the alimony is treated as a capital receipt, and therefore, the provisions of the Income Tax Act, 1961 do not apply. Hence it is not treated as income and is not taxable.

Detailed explanation-4: -Alimony is generally not granted to the seeking spouse if he or she is already receiving support during the time of divorce. Although the rewarding of alimony can be revised in such events based on the arguments for claiming the support.