The Centre has told the Karnataka High Court that same-sex partners cannot avail themselves of tax exemptions available to “spouses” under the Income Tax Act unless their relationship is legally recognised as a marriage.
The submission was made in response to a constitutional challenge by Bengaluru-based same-sex partners Anurag Kalia and Akhilesh Godi, who have challenged their exclusion from the exemption available for certain gifts received from a “relative” under Section 56(2)(x) of the Income Tax Act, 1961.
Additional Solicitor General Aravind Kamath, appearing for the Centre, submitted that the exemption is not premised on the sex of the individuals but on legally recognisable and verifiable relationships, including marriage and specified blood relations.
He argued that Parliament had consciously limited the definition of “relative” to relationships that can be objectively determined by tax authorities, without requiring them to examine the nature or stability of personal relationships.
During the hearing, Justice B M Shyam Prasad observed that expanding the provision through judicial interpretation to cover relationships not recognised under law could create uncertainty in determining eligibility for the exemption.
The proceedings arose from a gift made by Godi to Kalia, a 22-carat gold bracelet weighing 14.41 grams and valued at Rs 1,15,500. The bracelet was a family heirloom that Godi had received from his father.
Section 56(2)(x) provides for taxation of certain money or property received without consideration as “income from other sources”, subject to the statutory conditions and thresholds. Gifts received from specified “relatives”, however, are excluded from its ambit. The statutory definition includes the spouse of an individual.
The petitioners contend that the same gift would have qualified for the exemption if it had been exchanged between legally recognised spouses. They argue that because same-sex relationships are not currently recognised as marriages under Indian law, same-sex couples are effectively denied the corresponding tax benefit.
They have challenged this exclusion as discriminatory and violative of Articles 14 and 15 of the Constitution.
The petitioners have clarified that they are not asking the Court to recognise their relationship as a marriage.
Their challenge is confined to the tax provision, with the contention that the use of the term “spouse” excludes same-sex couples from a statutory benefit available to heterosexual spouses despite the nature of the underlying transaction being identical.
Senior Advocate Dhruv Janssen-Sanghavi, appearing for the petitioners, has argued that the issue is one of equal treatment under the law and does not require the Court to confer legal recognition of marriage on same-sex couples.
The petitioners, both software engineers and IIT alumni, have been living together in Bengaluru since 2019 and jointly own a house, according to their submissions before the Court.
The Centre has maintained that the exemption framework is based on relationships that are legally identifiable and capable of being verified by tax authorities.
According to the government’s position, extending the term “spouse” to include same-sex partners without corresponding recognition under marriage law would effectively require an expansion of the existing statutory framework.
The case thus raises a specific question at the intersection of tax law and the legal status of same-sex relationships, whether a benefit expressly linked to the status of a “spouse” can be extended to same-sex partners whose relationship is not recognised as a marriage under existing law.
The Karnataka High Court is continuing to hear the constitutional challenge.
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