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Mint
4 days ago
- Business
- Mint
How spousal maintenance is taxed after divorce
NEW DELHI : While a failed marriage causes immense emotional distress, its financial and tax implications can't be understated. In India, a court decides how much maintenance one spouse will pay to the one earning less or having no income at all. The maintenance could be in different forms: one-time, periodic, or transfer of assets. Different types will have different tax treatment. However, it must be noted that the Income Tax Act,1961, does not contain specific provisions on the same. Relevant case laws, along with analogous provisions, are used to determine its taxability. Tax on maintenance The lump sum maintenance a spouse receives is not taxable. It is tax-exempt because it is considered a capital receipt, which does not fall within the ambit of the Income Tax Act. Sometimes, a spouse might prefer regular maintenance, that is, a monthly payment. Regular maintenance is taxable as 'income from other sources" as it is considered a revenue receipt, said chartered accountant Naveen Wadhwa, vice-president, research and advisory division at Taxmann, an online source for taxation research. However, chartered accountant Ashish Karundia has a different view. "The periodic payments are the very condition of divorce, based on which the court issues the divorce decree. The spouses remain married at the time when the periodic payments are agreed, so no question of taxation on this amount for them being relatives. Since divorce was agreed upon on this very condition, the amount remains tax-free even after the divorce decree is issued," he said. Any fresh arrangement, not part of the initial divorce decree, will be taxable. For example, spouses may demand enhanced compensation adjusted against inflation. 'The enhanced amount becomes taxable in the hands of the receiving spouse because it happens after the divorce decree was issued," Karundia added. Tax on transfer of assets Suppose a spouse transfers property to the other spouse as part of maintenance. Under Section 47 of the Income Tax Act, a transfer to a former spouse as part of a divorce settlement is not regarded as a 'transfer" for capital gains purposes. However, if the former spouse generates income from it via receiving rent or sale, it will be taxed in his or her hands. "If a property is gifted between spouses, no capital gains tax arises to the donor. The recipient spouse will not be taxed either on the value of the gifted property because a spouse falls within the definition of relative. However, the clubbing provisions will apply to any income generated further on the same," Wadhwa said. 'It ceases to apply if the transfer is made in connection with an agreement to live apart, in which case the income from the property would be taxable in the hands of the recipient ex-spouse," he added. If property is transferred after the divorce has taken place (excluding a transfer that had been agreed upon as a precondition), it will be taxed in the hands of the receiving spouse. Separation Any kind of maintenance will not be taxable if a couple lives separately without divorce because, in the eyes of the law, the spouses are still married and would qualify as relatives, Karundia said. Can a paying spouse claim a tax deduction? It is not possible. Maintenance is considered a personal expense and not tax-deductible for the payer. However, some courts might consider your post-tax salary instead of gross salary when deciding the amount of alimony. It is important to note that deductions such as employee provident fund, insurance premiums will not be excluded from your salary when the court determines your income. 'Different courts look at it differently. It is up to the spouse and the lawyer to present their case wisely. For example, a person earning ₹1 lakh a month may have to pay ₹20,000 in taxes. If a court asks him to pay 50% of his gross salary, ₹50,000 per month will go to the spouse, ₹20,000 in taxes, and he will be left with only ₹30,000. That said, the court may only consider his post-tax salary, that is, ₹80,000," Karundia said. In cases where the court has specifically ordered that a certain property will go to the spouse, the income out of such property will be taxable in his or her hands directly. The paying spouse will not have to add such income to his or her taxable income. For example, a spouse owns a two-floor house. 'If the court orders that rental income from one of the floors will belong to the other spouse, it will be taxable in the latter's hands. This arrangement is called an overriding charge, that is, redirecting income to the other party before it becomes taxable for the original recipient," Karundia added.
Mint
4 days ago
- Mint
Indian woman found dead under mysterious circumstances in Sharjah flat; family alleges husband strangled her over dowry
An Indian woman was found dead under mysterious circumstances in her flat in the Rolla area of Sharjah, United Arab Emirates (UAE), on Saturday morning. She has been identified as 29-year-old Athulya Sekhar, originally from Kollam in Kerala. Athulya's parents have alleged dowry harassment by her husband, Satheesh. They have filed a police complaint, alleging that Satheesh strangled Athulya, kicked her stomach and hit her head with a plate between 18 and 19 July, leading to her death. They also claimed that their daughter was repeatedly harassed for not bringing enough dowry at the time of her marriage in 2014. The parents said that they had given a bike and 43 sovereigns of gold in the marriage. On the basis of the complaint, Kerala police have registered a murder case under various sections of the Bharatiya Nyaya Sanhita (BNS) and the Dowry Prohibition Act, 1961 against Satheesh. Athulya's father Rajashekharan Pillai alleged that Satheesh was an alcoholic and often became violent. 'Once when she was physically assaulted, I was planning to take her back home. But he would apologise and she forgave him,' Rajashekharan said. Athulya leaves behind a 10-year-old daughter. According to media reports, Satheesh has denied involvement in Athulya's death and said he did not believe she would die by suicide. He too wanted to know what happened to his wife, he added. Insisting that Athulya's death was suspicious, Rajashekharan said: 'I don't believe that my daughter will die by suicide. She shares a very intimate relationship with her daughter. Her death is mysterious. We have to find out what exactly happened to her. He is an alcoholic. He always gets violent. She bore all the torture for her. Earlier, such issues had also happened, and a case was filed with the police. We want to know what exactly happened to her. Her family has also released videos showing Athulya with visible injury marks and her husband appearing to lift a plastic stool to hit her. The tragic incident comes days after the death of another Kerala woman and her 16-month-old daughter in Sharjah. According to the police, the woman had died by hanging herself after suffocating her child to death on 8 July. The incident had reportedly stemmed from marital dispute.
Hindustan Times
4 days ago
- Hindustan Times
Kerala woman's death: Dubai company ‘shocked' after watching abuse videos, sacks Indian husband
A Dubai-based company, where the husband of a Kerala woman worked, sacked him on Monday after she was found dead in Sharjah on Saturday, Gulf News reported. Athulya Sekhar, an Indian woman from Kerala, found death on Saturday. A senior HR manager of the construction company said the firm issued a letter of termination to Satheesh Sivasankara Pillai, a site engineer with the company, following the death of his wife, Athulya Sekhar. 'We took the action based on the media reports about a case registered against him in Kerala and circumstantial evidence of his violent and abusive behaviour in videos that appeared online,' the manager was quoted by Gulf News as saying. "This is to inform you that your services are hereby terminated with immediate effect for your apparent involvement in your wife's death who took her own life on 19th July, 2025 in Sharjah owing to your violent physical & mental harassment to her which is a criminal offense in UAE, and based on the circumstantial evidences and the clippings of your violent treatment to her as shown by the print & visual media and as reported by the relatives of your wife," the termination letter read. 'We were shocked to see the videos that she had shared with her family, in which he is physically abusing and mentally harassing her,' the news outlet quotes the company as saying. Athulya Sekhar, from Kerala, was found dead in her Sharjah apartment in the UAE early on Saturday, leading the Kerala Police to register a murder case against her husband. Gulf News reported, citing her family, that Athulya's death coincided with her 30th birthday and the first day of a new job. According to the complaint filed by the woman's mother, her husband, Satheesh strangled her, kicked her stomach, and hit her head with a plate between July 18 and 19, leading to her death, India Today reported. Athulya Sekhar was found dead in her flat in Rolla area, according to her sister and brother-in-law living in Sharjah. The death of Athulya, the mother of a 10-year-old girl, has sent fresh shockwaves through the Indian community in the UAE, Gulf News reported. Dowry harassment allegation against husband Athulya's family alleged that she was repeatedly harassed for not bringing enough dowry at the time of their marriage in 2014, despite having given a bike and 43 sovereigns of gold, India Today reported. A case has been registered against Satheesh under multiple sections of the Bharatiya Nyaya Sanhita (BNS) and the Dowry Prohibition Act, 1961. The woman's family has alleged that she endured years of mental and physical abuse due to persistent dowry demands. Husband denies allegation Speaking to the media from the UAE, Satheesh has denied the allegations, claiming he had no role in Athulya's death. He said he did not believe she would die by suicide and that he, too, was seeking answers. Her father, however, maintained that the circumstances around her death were suspicious. 'I don't believe that my daughter will die by suicide. She shares a very intimate relationship with her daughter. Her death is mysterious. We have to find out what exactly happened to her. He is an alcoholic. He always gets violent. She bore all the torture for her. Earlier also, such issues had happened and a case was filed with the police. We want to know what exactly happened to her,' he said. Her family also released videos showing Athulya with visible injury marks and her husband appearing to lift a plastic stool to hit her. 'We will be visiting the Sharjah Police for completing the formalities of filing the case tomorrow. We are also approaching the Indian Consulate in Dubai,' Gulf News quotes her brother-in-law as saying on Sunday.
India Today
5 days ago
- India Today
Another Kerala woman found dead in UAE, family alleges dowry harrasment by husband
Kerala police have registered a murder case against a man after his wife, Athulya (29), was found dead in their flat in United Arab Emirates (UAE) on Saturday to the complaint filed by Athulya's mother, her husband, Satheesh strangled her, kicked her stomach, and hit her head with a plate between July 18 and 19, leading to her family claimed she was repeatedly harassed for not bringing enough dowry at the time of their marriage in 2014, despite having given a bike and 43 sovereigns of gold. The case has been registered under various sections of the Bharatiya Nyaya Sanhita (BNS) and the Dowry Prohibition Act, 1961 against her husband, Satheesh. The woman's family alleged that she was subjected to years of mental and physical torture over dowry daughter of Rajashekharan Pillai and Thulasibai from Kollam, leaves behind a young daughter. Her father alleged that Satheesh was an alcoholic and often became violent. 'Once when she was physically assaulted, I was planning to take her back home. But he would apologise and she forgave him,' Rajashekharan to the media from the UAE, Satheesh denied involvement and said he did not believe Athulya would die by suicide, adding that he too wanted to know what happened to her father insisted her death was suspicious. 'I don't believe that my daughter will die by suicide. She shares a very intimate relationship with her daughter. Her death is mysterious. We have to find out what exactly happened to her. He is an alcoholic. He always gets violent. She bore all the torture for her. Earlier also, such issues had happened and a case was filed with the police. We want to know what exactly happened to her,' he family also released videos showing Athulya with visible injury marks and her husband appearing to lift a plastic stool to hit incident comes days after another woman, 32-year-old Vipanjika Mani was found dead along with her one-and-a-half-year-old daughter, Vybhavi, in Al Nahda, per the mother's complaint, Vipanjika was tortured mentally and physically by the accused, her husband, saying the dowry given was not enough. It also said that her hair was cut to make her look ugly as she was fair and her husband and his family were dark in complexion.- EndsMust Watch IN THIS STORY#Kerala
Mint
18-07-2025
- Business
- Mint
Lok Sabha panel backs taxpayer-friendly GAAR tweaks in Income Tax Bill review
New Delhi: A Lok Sabha panel reviewing the Income Tax Bill, 2025 is set to propose a more taxpayer-friendly approach to anti-avoidance provisions aimed at curbing aggressive tax planning. The government is likely to accept most of the Select Committee's 285 recommendations and plans to reintroduce a revised legislation in the monsoon session of Parliament starting Monday, according to three persons aware of the working of the panel and the thinking in the government. The Income Tax Bill, 2025, once approved by Parliament and assented to by the President, will become a law, replacing the Income Tax Act, 1961. The committee, led by the ruling Bharatiya Janata Party's Lok Sabha member Baijayant Panda, is set to recommend that India's General Anti-Avoidance Rules (GAAR) that disallow transactions mainly designed to avoid tax, should be assessed with regard to the specific context of each case. That would require restoring certain wordings in the provisions of the Income Tax Act, 1961 as they exist today, but were dropped as part of the effort to simplify the text in the draft bill, said one of the three persons cited earlier, all of whom spoke on the condition of anonymity. A Select Committee is an ad hoc or temporary parliamentary panel formed with the specific purpose of examining a particular bill. It is dissolved after the task is achieved. The idea is to balance strong enforcement of the anti-evasion provisions with tax payer protection. The existing Section 98 of the Income Tax Act, 1961 stipulates that if a transaction is found to be designed for tax avoidance, then the consequences including denial of tax benefit will be decided in an appropriate manner 'in the circumstances of the case.' The committee is set to recommend restoring these words referring to the specific circumstance of the case in the final form of the Bill that the government will introduce in Parliament, as these words act as a safeguard to ensure GAAR is reasonable and procedurally fair, the person added. The select committee endorsed the revised provision in the Bill with the modification that these words should be reinstated explicitly. This is expected to ensure a balance between deterrence against tax avoidance and taxpayer protection, the person said. Experts pointed out that this phrase makes sure that an assessment or conclusion made in the case of one transaction of a company is not blindly applied to another transaction of the same company or to a similar transaction by another company without looking into the specific circumstances of those transactions. 'The phrase 'in the circumstances of the case' is crucial because it ensures that tax authorities take into account the specific facts of each arrangement before applying harsh consequences and declaring any arrangement impermissible under GAAR. Although the likely intent to remove the phrase from draft Income Tax Bill 2025 was to simplify the language of provision, but absence of this phrase would have allowed tax officers to deny tax benefits in a broad and mechanical manner—even in genuine commercial transactions,' said Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm. Experts believe dropping the phrase could lead to uncertainty and litigation and by recommending its reinstatement, the Select Committee has rightly moved to protect taxpayers from one-size-fits-all treatment and uphold fairness in tax system. The committee is tentatively scheduled to submit its report to the Lok Sabha on Monday. The finance ministry is preparing to rework the Bill based on the committee's report with a high degree of urgency in order to get the Bill passed in the current session to implement the new income tax law from 1 April, 2026. The ministry will seek the cabinet approval once the select committee gives its report next week, said the second person. The Select Committee's suggested changes to the Income Tax Bill, 2025 mainly address drafting anomalies as compared to language of the existing law and include updates from the Finance Act 2025, said Sameer Gupta, EY India tax leader, citing media reports. 'If there are any substantive changes, it will need to be evaluated after the (Select Committee's) Report and the amended Bill are tabled before the Parliament," Gupta added. According to Gupta, suggestions for more substantive reforms include further simplification and rationalisation of residency rules, TDS/TCS provisions, deductibility of certain expenses which are currently prone to litigation, etc. "If they are not addressed in the amended Bill, they will need to be taken up as part of subsequent Budget exercise,' said Gupta.
