Income tax information: How one-time alimony is taxed?

A decrease court docket has divorced me however my spouse has put an enchantment in High Court. So my divorce decree has been placed on maintain till the High Court decides the case. Now me and my spouse don’t want the proceedings of court docket to go on and subsequently wish to go for mutual consent for divorce within the High Court. I haven’t got the quantity to present to her as one-time alimony so I’ve determined to present away a property standing in my mom’s identify to my spouse. I wish to know if my mom can provide the property which is in her identify to my spouse on the time of the divorce settlement within the excessive court docket. I additionally wish to know whether or not my spouse may have any tax implications now and when she sells that property.

Under regular circumstances when a mother-in-law makes a present to the daughter-in-law, the earnings arising from such an asset is required within the fingers of the parent-in-law who had made such a present. I perceive the home property which stands in your mom’s identify might be transferred by your mom to your spouse in consideration of your spouse agreeing to the phrases of mutual divorce. So there isn’t a query of there being no consideration for this switch. It just isn’t vital that the consideration must be between the identical events. It may even transfer from a 3rd occasion.

The clubbing provisions apply so long as the connection between mother-in-law and daughter-in-law subsists. Since in your case, the connection of mother-in-law and daughter-in-law will get severed on the time of the ultimate pronouncement of divorce, the query of clubbing doesn’t come up anyway.

Since the flat is being transferred for consideration, there isn’t a tax legal responsibility in your spouse in respect of receipt of such a flat. However, as and when your spouse sells it, she should pay capital good points tax on the capital good points computed as per the provisions of earnings tax legal guidelines.

Please word that the total worth won’t grow to be taxable as your spouse will be capable to take the price of the property to your mom as her price and compute the capital good points accordingly.

Balwant Jain is a tax and investments professional and may be reached at jainbalwant@gmail.com and @jainbalwant as his Twitter deal with.

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Updated: 14 Jul 2023, 12:02 PM IST