Marriage and divorce are major life decisions, but their impact extends beyond relationships to your tax planning as well. Wedding gifts, financial transactions between spouses, children's income, and alimony received after divorce are all subject to different income tax rules. Often, people are unaware of these rules, so today we will explain in simple terms what is tax-free, what is taxable, and what you need to keep in mind.

Are Wedding Gifts Taxable?
Generally, if a person receives gifts worth more than ₹50,000 in a financial year, it is taxable. However, gifts received by the bride and groom on their wedding day are completely tax-free, regardless of their value. It's important to note that this exemption applies only to the bride and groom. Gifts received by relatives or guests at the wedding are not covered by this exemption.

Showing Fake Gifts Can Be Risky
Some people try to show black money as wedding gifts, but this can be risky. Tax authorities may demand proof of the wedding, such as photos, guest details, or expense details. If the gifts are found to be fake, you may have to pay up to 60% tax along with penalties and interest.

What are the rules for gifts between spouses? (What Is the Clubbing Rule?)
Husbands and wives can gift each other money, property, or shares, and there is no tax at the time of the gift. However, the income generated from that gift, such as interest, rent, or dividends, is taxable. This income is added to the income of the spouse with the higher income. This is called the Clubbing Rule. This rule does not apply after a divorce or the death of one spouse.

How is a child's income taxed? (Tax Rules on Minor Children's Income)
The income of minor children can be of two types. First, income such as interest, rent, or dividends. This income is added to the income of the parent who earns more.  A ​​deduction of ₹1,500 per child is available. Secondly, income earned by a child through their own efforts, such as acting or singing, is not added to the parents' income. The clubbing rule also does not apply to the income of children with disabilities.

Tax on Alimony (Is Alimony Taxable After Divorce?)
There is no separate tax law for alimony in India. The taxability depends on how the payment is made. For example, if a lump sum is paid, it is generally considered tax-free. However, alimony received on a monthly basis is considered taxable in most cases. The person paying alimony does not receive any tax deduction for it.

Tax rules related to marriage and divorce are somewhat complex, but with the right information, you can avoid unnecessary trouble. It is best to understand the tax rules before making any major financial decisions and seek expert advice if needed.

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.