Supreme Court Clarifies How PF and ESPP Deductions Are Treated in Maintenance Cases
Can a husband reduce his income for maintenance purposes by relying on salary deductions towards Provident Fund (PF), Employee Stock Purchase Plans (ESPPs), and other employee benefits?
The Supreme Court has now drawn an important distinction between mandatory statutory deductions and voluntary contributions that ultimately benefit the earning spouse. In Harpreet Sawhney v. Puneet Sharma, the Court held that PF and ESPP contributions could not simply be treated as permanent financial liabilities for the purpose of reducing the income considered for maintenance.
The judgement is significant for matrimonial litigation because it makes clear that the amount credited as take-home salary is not necessarily the only figure a court must consider while assessing an earning spouse’s financial capacity.
A bench comprising Justice Sanjay Karol and Justice N. Kotiswar Singh delivered the judgement on August 10, 2026, enhancing maintenance for the parties’ two minor children and increasing the wife’s interim maintenance in view of her medical circumstances.
What Did the Supreme Court Decide About PF and ESPP Deductions?
The central issue was whether contributions towards PF and ESPPs should be treated in the same manner as compulsory deductions such as income tax and professional tax.
The Supreme Court rejected that approach.
The Court observed that PF and ESPP deductions are ultimately financial benefits accruing to the husband. Unlike taxes, which constitute statutory liabilities and leave the employee’s hands permanently, such contributions remain connected with the employee’s financial interests and may become available to him in the future.
The Court specifically observed:
“PFs and ESPPs are not permanent charges.”
The judgement therefore establishes an important principle: a salary deduction cannot automatically be treated as an unavoidable reduction in income merely because it appears on a salary slip.
Why This Matters in Maintenance Proceedings
In maintenance litigation, parties frequently rely on salary slips, bank statements, tax returns, loan liabilities and investment statements to establish their financial capacity.
The Supreme Court’s reasoning indicates that courts should look beyond the superficial distinction between “gross salary” and “net salary”.
The real question is:
Is the amount deducted from salary a genuine compulsory outgoing, or does it represent money that continues to benefit the earning spouse?
This distinction becomes particularly important where a substantial portion of salary is voluntarily directed towards savings, investments, stock purchase schemes or other employee benefits.
Therefore, PF and ESPP deductions for maintenance purposes cannot automatically be used to reduce the income available for supporting the spouse or children.
Facts of the Case
The parties married on December 9, 2004, according to Sikh rites in New Delhi. They have two sons, born in 2011 and 2014.
The matrimonial relationship subsequently deteriorated, and the husband left the wife and children in June 2018. The wife instituted divorce proceedings under Section 13(1)(ia) of the Hindu Marriage Act, 1955, alleging cruelty.
She also sought interim maintenance for herself and the children under Sections 24 and 26 of the Hindu Marriage Act. The wife had sought substantial monthly financial support for herself and the two minor children.
The Family Court initially declined personal maintenance to the wife after considering her own income but awarded maintenance for the children.
As the proceedings continued, the amount payable for the children was progressively increased. In July 2024, the Family Court fixed maintenance at â‚ą50,000 per child per month.
The wife thereafter approached the Delhi High Court seeking enhancement.
During the proceedings, she was diagnosed with aggressive breast cancer, adding a significant medical and financial dimension to the dispute.
Husband’s Salary and the Dispute Over Deductions
The husband’s monthly income was recorded at approximately ₹4.5 lakh, besides an average annual bonus of around ₹6 lakh.
The husband relied upon substantial monthly salary deductions to contend that his actual disposable income was considerably lower.
The Delhi High Court had treated deductions amounting to approximately â‚ą164,856 per month as compulsory deductions, including income tax, PF, professional tax and related deductions, leaving a substantially lower amount as disposable income.
The Supreme Court took a closer look at the nature of these deductions.
That distinction ultimately became important in determining the maintenance payable to the children.
Statutory Deductions vs Voluntary Financial Benefits
The judgement should not be misunderstood as holding that every salary deduction is irrelevant.
The Court’s reasoning is more nuanced.
Mandatory Deductions
Amounts such as applicable income tax and professional tax are statutory liabilities. They are not voluntary investments made by an employee for his own future financial benefit.
PF and ESPP Contributions
PF and ESPP contributions stand on a different footing because the amounts ultimately accrue to the employee or provide him with a financial benefit.
Consequently, their presence on a salary slip does not automatically justify treating them as permanent expenses that reduce the employee’s income for maintenance purposes.
This is an important distinction for lawyers handling maintenance disputes because the court may examine the substance and purpose of a deduction rather than merely accepting the net salary figure shown in a payslip.
Maintenance Is Not Determined Merely by Take-Home Salary
The judgement reinforces a broader principle in maintenance litigation: financial capacity cannot always be assessed by looking only at the amount ultimately credited into a bank account.
Courts may have to consider:
- Gross salary and other employment income;
- Bonuses and additional remuneration;
- Mandatory statutory deductions;
- Voluntary savings and investments;
- PF and employee stock contributions;
- Existing genuine financial liabilities;
- Standard of living of the parties;
- Reasonable needs of the children;
- Educational and medical expenses; and
- The overall financial circumstances of both parties.
This approach helps prevent a situation where an earning spouse could substantially reduce the income considered for maintenance simply by diverting salary into savings or investment-linked schemes.
Supreme Court Enhances Child Maintenance to â‚ą1.5 Lakh Per Month
After considering the circumstances, the Supreme Court enhanced the maintenance payable for the two children to â‚ą150,000 per month, comprising â‚ą75,000 per child per month.
The enhanced maintenance was made effective from January 1, 2025.
The Court also increased the wife’s interim personal maintenance to ₹30,000 per month, particularly taking into account her medical expenses.
The case therefore involved more than a technical dispute over salary deductions. The Court was required to assess the financial needs of two minor children alongside the wife’s circumstances and the husband’s actual financial capacity.
The â‚ą1.66 Lakh Monthly Expenses of the Children
An important aspect that strengthens the understanding of the case is the evidence concerning the children’s expenses.
The wife’s case before the Supreme Court included the submission that the combined monthly expenses of the two children were approximately ₹166,847, apart from other household obligations.
This figure provided important context for assessing whether the maintenance fixed by the High Court adequately reflected the children’s actual needs.
The Supreme Court’s eventual enhancement to â‚ą1.5 lakh per month, therefore, has to be understood in the context of the children’s claimed expenses, the husband’s income and the overall circumstances of the family—not as a universal formula that â‚ą75,000 per child must be awarded in every case.
Does This Mean PF Can Never Be Deducted While Calculating Maintenance?
No.
That would be an overstatement of the judgement.
The Supreme Court’s ruling is better understood as saying that PF and ESPP contributions cannot automatically be treated as permanent compulsory charges merely because they appear as deductions from salary.
The actual treatment of any deduction will depend upon the facts, the nature of the contribution, the applicable employment arrangement and the overall financial circumstances of the parties.
Therefore, advocates should avoid presenting the judgement as creating an absolute rule that every PF contribution must always be added back to income in every maintenance proceeding.
The stronger legal proposition is that courts are entitled to distinguish between genuine compulsory liabilities and voluntary contributions that ultimately benefit the earning spouse.
Vehicle Transfer Direction
The Supreme Court also dealt with the husband’s earlier undertaking concerning a Mahindra XUV500.
He was directed to complete the necessary documentation for transferring ownership of the vehicle in accordance with that undertaking within three months of the Supreme Court’s order.
The civil appeals were consequently disposed of.
Legal Provisions Involved
| Provision / Concept | Relevance |
|---|---|
| Section 13(1)(ia), Hindu Marriage Act, 1955 | Divorce on the ground of cruelty. |
| Section 24, Hindu Marriage Act, 1955 | Interim maintenance and litigation expenses during matrimonial proceedings, subject to statutory requirements. |
| Section 26, Hindu Marriage Act, 1955 | Orders concerning custody, maintenance and education of minor children. |
| Provident Fund | Employment-linked retirement benefit: the Court held that relevant PF contributions could not simply be treated as permanent compulsory charges. |
| ESPP | Employee stock purchase arrangement; contributions ultimately provide a financial benefit to the employee. |
| Income Tax / Professional Tax | Statutory liabilities are distinguished from PF and ESPP contributions. |
Key Legal Takeaways From the Supreme Court Judgement
- A salary deduction is not automatically an allowable deduction from income for maintenance.
- PF and ESPP contributions may be treated differently from statutory taxes.
- Courts can examine the true nature of salary deductions.
- Take-home salary is not necessarily the complete measure of an earning spouse’s financial capacity.
- Voluntary savings that ultimately benefit the earning spouse may be relevant while determining maintenance.
- Maintenance must be assessed on the facts and circumstances of each case.
- The judgement does not create a universal fixed maintenance formula for children.
Case Details
| Particular | Details |
|---|---|
| Case Title | Harpreet Sawhney v. Puneet Sharma |
| Court | Supreme Court of India |
| Decision Date | August 10, 2026 |
| Neutral Citation | 2026 INSC 822 |
| Case Numbers | Civil Appeals arising out of SLP (C) Nos. 31815-31816 of 2025 |
| Bench | Justice Sanjay Karol and Justice N. Kotiswar Singh |
| Impugned Case | MAT.APP.(F.C.) No. 299/2024, Delhi High Court |
The Supreme Court’s own records confirm that SLP (C) Nos. 31815-31816 of 2025 arose from the Delhi High Court proceedings in MAT.APP.(F.C.) No. 299/2024.
Conclusion
The Supreme Court’s decision in Harpreet Sawhney v. Puneet Sharma provides an important clarification on the assessment of income in maintenance proceedings.
The essential lesson is that financial capacity cannot always be reduced to the net salary appearing on a payslip. Mandatory statutory liabilities may legitimately reduce disposable income, but voluntary contributions such as PF and ESPPs, which ultimately create a financial benefit for the earning spouse, cannot automatically be placed in the same category.
For matrimonial courts, the judgement underscores the importance of examining the substance of financial deductions rather than merely their labels.
For litigants, it sends an equally important message: maintenance proceedings require a transparent assessment of actual income, genuine liabilities, investments, savings and the reasonable needs of the spouse and children.
In that sense, the ruling strengthens the principle that maintenance should reflect real financial capacity, not an artificially reduced income created by voluntary salary deductions.
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