Alimony and Taxation: Here’s what you need to know
For most women, getting divorced is a challenging step. It can be emotionally very disturbing and unsettling for many women and create a lot of confusion, be it emotionally or financially. Stress makes life further complicated and concentrating on finances becomes difficult. One needs to plan the process through and not proceed hastily. A part of this financial plan also includes understanding the tax audit format . If you are one of the many women planning your finances after divorce, here we help you familiarise with the taxation process on alimony: When is alimony not taxable? Under various circumstances, it is decided the entire amount that is to be paid as alimony will be given in a lump sum instead of instalments over a long period of time. The entire amount is paid in cash which is also known as one-time receipt. According to Bombay High Court’s order, the amount that is paid as alimony should be treated as a capital asset. Under the Income Tax