Indian cricket team spinner Yuzvendra Chahal and Dhanashree Verma on Thursday were granted divorce by a Bandra family court. Chahal’s lawyer, Nitin Kumar Gupta, confirmed the development while speaking to reporters outside the court. “The court has granted the decree of divorce. The court has accepted the joint petition of both parties. The parties are no longer husband and wife,” advocate Nitin said.
The Bombay High Court on Wednesday waived the mandatory six-month cooling off period post filing of divorce plea by cricketer Yuzvendra Chahal and his estranged wife Dhanashree Verma, and directed the family court to decide their divorce plea by Thursday. As a part of the settlement, the cricketer will pay ₹4.75 crore as alimony to Verma. He has already transferred ₹2.37 crore. What exactly is alimony? Are Alimony Laws Equal For Working And Non-Working Women In India? Here is an explainer on it.
What Is An Alimony?
Alimony refers to court-ordered payments awarded to a spouse or former spouse within a separation or divorce agreement. The reason for alimony is to provide financial support to the spouse who makes a lower income, or in some cases, no income at all. Traditionally viewed as a means to support wives who may have sacrificed financial independence for marriage and family. However, its role is evolving as more women enter the workforce.
Alimony is typically granted to ex-spouses after long-term marriages, usually those lasting over 10 years. However, it isn’t a lifelong guarantee—it ends if the recipient remarries, upon the payer’s death, or if the court decides to terminate it. Refusing to pay—or not keeping up to date with—alimony payments may result in civil or criminal charges for the payer.
Act And Alimony
In India, alimony isn’t governed by a single law but falls under various acts, such as the Hindu Marriage Act, Special Marriage Act, Indian Divorce Act, Muslim Women Act, and Parsi Marriage and Divorce Act. When deciding on alimony, courts take several factors into account, including both spouses’ financial situations, their lifestyle during the marriage, how long they were married, and any child custody arrangements. The Supreme Court outlined eight key factors that help determine whether alimony should be granted and, if so, the appropriate amount to be paid.
Factors Considered While Deciding Alimony
The court considers both spouses’ social and financial status when determining alimony. It also evaluates the wife’s standard of living in the matrimonial home, taking into account factors such as social standing, financial resources, and lifestyle. This includes property ownership, the number and value of cars, house size, household amenities (such as air conditioners and swimming pools), the number of domestic helpers, and the frequency of vacations, both domestic and international.
While the wife is undoubtedly entitled to maintain the same standard of living she enjoyed during the marriage, her claims must remain reasonable. The court also considers the reasonable needs of the wife and any dependent children when determining the alimony amount. Priority is given to their basic and long-term needs, with the welfare of the children being a top concern.
To protect assets during a divorce, legal experts advise planning finances well in advance. While prenuptial agreements can help set financial expectations, they are not legally binding in India and can be challenged in court. That said, if the court finds that the wife is financially independent, it may choose to deny alimony.
Is Alimony Taxable?
A one-time lump sum alimony payment is treated as a capital asset and is not taxable for the recipient. Since it’s considered a non-taxable capital receipt, there’s no tax liability on it. However, if alimony is paid in recurring installments—such as monthly or yearly support—it is classified as taxable income under ‘Income from Other Sources.’ The recipient must declare these payments in their income tax return and pay taxes based on their applicable tax slab.
Alimony paid through asset transfers also has tax implications. If assets are transferred before the divorce, they may be tax-exempt as gifts from relatives. But if the transfer happens after the divorce, the recipient may be required to pay taxes on the received assets. Importantly, the person paying alimony cannot claim any tax deductions for these payments.
In short, while one-time alimony settlements and pre-divorce asset transfers are generally tax-free, recurring alimony payments are subject to taxation.
