In India, the taxability of alimony depends on how it is received—whether as a lump sum or periodic payments. Here’s a breakdown:
1. Lump-Sum Alimony (One-Time Payment) – NOT Taxable
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If alimony is received as a one-time settlement (e.g., a lump sum amount given as part of a divorce agreement), it is considered capital receipt and is not taxable in the hands of the recipient.
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The payer cannot claim any tax deduction for this payment.
2. Periodic Alimony (Regular Payments) – Taxable
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If alimony is paid regularly (monthly/annually), it is considered income in the hands of the recipient and is taxable under ‘Income from Other Sources’.
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The recipient must include it in their total income and pay tax as per their applicable income tax slab.
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The payer cannot claim a tax deduction for alimony payments.
Other Considerations:
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If alimony is given in the form of assets (e.g., property, shares, or jewelry), it may attract capital gains tax when sold.
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If alimony is structured as interest-bearing payments, the interest portion may be taxable.