A same-sex couple in Bengaluru has approached the Karnataka High Court, challenging a provision of the Income Tax Act that they argue unfairly taxes gifts exchanged between partners. The couple contends that this provision discriminates against them by denying them the tax benefits available to heterosexual couples.
The core of the challenge lies in Section 56(2)(x) of the Income Tax Act, 1961, which stipulates that any money or property received without consideration, exceeding ₹50,000 in value, is taxable as ‘income from other sources.’ However, the Act provides an exemption for gifts received from ‘relatives,’ a definition that includes ‘spouses.’ The petitioners argue that since Indian law does not currently recognize same-sex relationships as marriage, they are excluded from this spousal exemption.
The case was brought before Justice B. Shyam Prasad, who has sought a response from the Union government regarding the petition. The couple, identified as Anurag and Akhilesh, are IIT alumni and software engineers who have been living together in Bengaluru for seven years. Their legal challenge stems from a gift of a 15-gram gold bracelet, valued at over ₹1 lakh, which Akhilesh gifted to Anurag and was declared in their tax returns.
The petitioners contend that the exclusion of same-sex couples from this tax benefit, which is otherwise available to heterosexual couples, violates their fundamental rights to equality and non-discrimination under Articles 14 and 15 of the Constitution. They argue that same-sex couples in long-term relationships should be treated on par with married heterosexual couples for the purposes of this tax exemption.
The couple’s legal team has drawn parallels with Supreme Court rulings that recognize long-term cohabitation as creating a strong presumption of marriage, citing the Shriramabai vs OIC Records case. They assert that the current tax law, by its literal interpretation, imposes a discriminatory burden solely based on sex and sexual orientation, taxing expressions of love and affection that would otherwise be tax-exempt for heterosexual partners.
The Income Tax Act’s definition of ‘relative’ as including ‘spouse’ is central to the dispute. While heterosexual couples, even if not formally married but presumed to be in a marital relationship, can avail this exemption, same-sex couples are precluded from doing so due to the absence of legal recognition of their unions as marriages in India. This disparity, the petitioners argue, results in unequal economic treatment.
The Income Tax Department, in response to similar challenges in other high courts, has maintained that the exemption under Section 56(2)(x) applies only to relationships recognized as marriages under Indian law. Affidavits filed in such cases have stated that the Act cannot redefine ‘spouse’ contrary to existing marriage laws and that the exemption cannot be extended without legislative changes recognizing same-sex unions. The department has argued that such petitions are an attempt to use tax law to gain marriage recognition, which is a matter for legislative or broader judicial consideration.
The Karnataka High Court has scheduled the next hearing for July 15. This case is being closely watched as it touches upon the intersection of tax law, constitutional rights, and the evolving legal landscape for LGBTQIA+ individuals in India. The Supreme Court’s 2018 ruling that decriminalized same-sex relationships and its subsequent jurisprudence on gender identity and sexual orientation are expected to be significant in the ongoing legal discourse.
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The Chenab Times News Desk
