The Karnataka High Court has sought a response from the Central Government regarding a petition challenging the constitutional validity of a tax provision that excludes same-sex partners from tax-free gift exemptions.
The writ petition, filed by Bengaluru-based software engineers Anurag Kalia and Akhilesh Godi, contests the fifth proviso of Section 56(2)(x) of the Income Tax Act, 1961. Under current regulations, gifts between spouses are exempt from tax, but the literal legal interpretation of the term spouse does not extend to same-sex couples.
The Valuation Dispute
The legal challenge was initiated after Godi gifted Kalia a 14.41-gram, 22-karat gold bracelet on their relationship anniversary. The jewelry, a family heirloom from Godi’s father, had an estimated value of Rs 1,15,500.
Under Section 56(2)(x) of the Income Tax Act, any asset worth over Rs 50,000 received without financial consideration is classified as taxable income from other sources. While gifts from relatives—defined to include a spouse—are exempted, Kalia was advised to report the bracelet’s fair market value in his tax return for the 2025-26 assessment year. Consequently, he faced a tax liability of 25 percent, plus a 15 percent surcharge and a 4 percent cess.
Constitutional Claims And Stance On Marriage
The petitioners, who are IIT alumni and have lived together in a jointly owned Bengaluru home since 2019, argued that they are denied the tax benefit solely on the basis of their sex. They asserted that this exclusion violates Articles 14 and 15 of the Constitution, which protect against discrimination based on sex and sexual orientation, as well as Articles 19(1)(a) and 21 by imposing a tax on an expression of affection.
Notably, the couple’s petition states that they are not seeking legal recognition of marriage, a presumption of marriage, or any official declaration of their marital status.
They pointed out that heterosexual couples in similar long-term cohabitation arrangements are presumed to be validly married under existing legal precedents, thereby qualifying as spouses and escaping the gift tax. The petition cited judicial rulings, including a 1927 Privy Council decision and a 2023 Supreme Court ruling, which protect the rights of long-cohabiting heterosexual partners.
Court Questions Scope Of Legal Definitions
During a brief hearing, Justice B M Shyam Prasad of the Karnataka High Court focused the proceedings on whether courts have the authority to expand the definition of spouse when the legislature has left the term undefined.
In oral observations, Justice Prasad questioned whether expanding the definition to prevent discrimination might inadvertently open a wider door to other relations, such as foster children. He remarked that the court intends to hear arguments specifically on this point of judicial interpretation.
A similar legal challenge to the same income tax provision is currently pending before the Bombay High Court, filed by petitioners Payio Ashiho and Vivek Divan.
