Are the amounts received by way of maintenance and alimony by a divorcee taxable? If yes, what is the applicable rate? Are there any exemptions available?
HD Maheshwari
India tax laws have not explicitly dealt with tax treatment of alimony. However, there is judicial precedence on this subject. In the case of Princess Maheshwari Devi of Pratapgarh vs. CIT (1984) 147 ITR 258, the Bombay High Court had held that alimony, if received as a lump sum, would be considered as a capital receipt. The court further held that amounts received monthly constitute a revenue receipt and are in the nature of income; hence, they need to be offered to tax. The court had relied on various rulings pronounced earlier while arriving at this conclusion. This income has to be included with other taxable income earned/received during the tax year (April 1 to March 31) and tax computed at progressive rates.
Swetha
According to Section 56(vii) of the Income Tax Act, 1961, if a person receives an immovable property without consideration, the same is taxable in the person’s hands. However, receipt of property from a relative is specifically excluded from the operation of the above clause. Hence, the gift of the plot by your father-in-law to your husband will not be taxable in your husband’s hands.
On your question regarding a joint loan, assuming that you have a separate source of income and pay EMI, you can claim the interest and principal repayment proportionate to your share in the property and loan as a deduction from your income. The principal repayment can be claimed up to a limit of ₹1,50,000 (u/s 80C), while interest can be claimed on actuals for a let out property (restricted to ₹2,00,000 if property is self-occupied). You can also claim deduction for pre-construction interest in five equal instalments starting from the year in which construction is completed (though in the case of a self-occupied property, this will be within the limit of ₹2,00,000).
The writer is Partner, Deloitte, Haskins and Sells LLP. Send your queries to >taxtalk@thehindu.co.in