Income tax laws near the world acknowledge the incidence of marriage and divorce, and Indian tax laws are not the only ones. This impact affects the tax liabilities.
Mentioned below is the discussion about how the Indian tax laws impact your tax liability.
Tax Treatment of Gifts Accepted During the Wedding
Let us begin with marriage. Under the Indian tax laws, as long as the aggregate of all the gifts obtained via all the sources in the year is less than Rs 50,000 in a year that is not feted as your income tax. If the aggregate value of all the gifts obtained in that year is more than this amount then the whole amount is treated as your income and taxed. There are some exceptions to this provision for taxing gifts. One of the exceptions towards the gifts obtained by the bride and the groom during their marriage. Thus, gifts obtained in one’s own marriage do not count as income of the person no matter what the aggregate amount of the gifts obtained.
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Since the gifts obtained by the bride and the groom only get privileged, any gifts obtain via any of their relatives would be taxed when the value exceeds Rs 50,000 in a year.
Keep in mind: prior to thinking of the occasion of a marriage in the family as a tool to convert your unaccounted money into white money, you should know that when you show a significant amount as gifts obtain on that occasion, the tax council might ask you to file the information of expenses on several functions of the marriage and source of these expenses. The tax council might ask you to produce photographs and videos of several functions of the marriage to find out the class of celebration of an occasion. The marriage expenses recorded in your books of accounts should match with the amounts of gifts claimed by you that you receive.
Income Tax Liability on Gifts Given to Life Partner
Similar to the marriage gifts, the gifts obtain through particular relatives along with your spouse do not call income beneath the Indian tax laws. While giving the gifts to your spouse on which no tax is levied, you could not lessen your tax as any income that goes to the spouse from the gifted amount will be clubbed along with your income. Even when the asset is converted into any other assets, the law of clubbing would get continued to apply. The law of clubbing would not be applicable to the income earned on doing the investments incurred with the income that has formerly clubbed. The provision of clubbing would persist as long as the occasion of the marriage carried on and would be applied once the marriage is dissolved because of divorce or death of any of the spouses.
Tax Liability on Minor’s Income
Under the current tax laws, any income made by your minor child would be clubbed with the parent, the same shall be carried on for the coming years even when the income of such parents becomes lesser than the other parent. However, the assessing officer may direct the clubbing to be revised from one parent to the other parents in the case of relative change in the level of income of parents.
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You should remember that you are qualified to claim the exemption of up to Rs 1500 for each child every year and the same is the excess income which shall get clubbed.
The income of your child is not needed to be clubbed. The clubbing law is applicable to only passive income such as interest, rent, dividends, capital gains, and others. And shall not apply towards the income made through minor via own skills, talent, or personal efforts. Hence the clubbing law shall not be applicable to the child artists or even to the child labour.
The law of clubbing shall not be applicable to the income accruing to and earned through the minor suffering from any particular physical disabilities. For the case of separation of parents, the income of the minor will be clubbed with that of the parent who maintains these minors in the year. Thus, in the case of judicial custody in which the child’s custody gets changed, the clubbing shall get revised and rely on the parent maintaining the minor.
Taxation Liability on Alimony
In courts toward the case of divorce, basically grant lump sum alimony and periodical payments for alimony is asked. There shall be no particular law in the Indian tax laws that deals with the tax treatment of these receipts. Thus, the taxability of alimony would be revealed on the grounds of normal taxation rules and several decisions directed by the judiciary with time. Lump-sum alimony obtained is not seen as income as it is treated as a capital receipt as it is mentioned by obtained in consideration of an agreement to release each other from the bond of marriage. But the periodic payment might come under tax as the same shall not be treated as a capital receipt. It is good to see that the Indian tax laws would not prolong any tax advantage to the person who pays this alimony whether lump sum or periodic.
