Same-Sex Partners Must Challenge Marriage Laws, Not Income Tax Act For Gift Tax Exemption: Centre To Karnataka HC
The Centre on Friday told the Karnataka High Court that same-sex partners seeking a tax exemption on gifts exchanged between spouses must challenge the laws governing marital status, rather than the Income Tax Act. The latter, it argued, merely refers to the legal status recognised under other enactments.
Additional Solicitor General K. Arvind Kamath, appearing for the Centre before Justice B.M. Shyam Prasad, made the submission while opposing a petition by Anurag Kalia and Akhilesh Godi.
The petition challenges the exclusion of same-sex partners from the gift tax exemption under the fifth proviso to Section 56(2)(x) of the Income Tax Act, 1961.
“Income Tax Act merely makes a reference to it. So, if the exclusion of the petitioner is because he lacks holding that status, he should be aggrieved by that status, not by the Income Tax law,” Kamath argued.
He referred to various enactments governing marriage, including the Hindu Marriage Act, the Special Marriage Act, the Parsi Marriage and Divorce Act, the Indian Divorce Act and the Christian Marriage Act. He argued that these laws determine the legal status of marriage and spouses, while the Income Tax Act merely refers to that status to determine eligibility for the exemption.
Kamath further argued that India's legislative policy distinguishes between homosexual and heterosexual relationships. He submitted that the Income Tax Act follows the same approach.
He also argued that the exemption was designed to prevent abuse and restrict the benefit to a defined category of persons. Expanding that category, he submitted, was a matter for Parliament or a competent authority.
Section 56(2)(x) provides for the taxation of specified sums of money or property received during a financial year when their aggregate value exceeds ₹50,000, subject to certain exceptions. These include gifts received from relatives. Section 2(41) of the Act defines a relative to include an individual's husband or wife.
Appearing for the petitioners, Advocate Dr. Dhruv Janssen Sanghvi argued that heterosexual couples receiving gifts covered by the exemption are not required to treat them as taxable income. Same-sex couples, however, are denied the same treatment when filing their income tax returns, he submitted.
Sanghvi contended that discrimination based on sexual orientation cannot be permitted. He also rejected the Centre's argument that extending the exemption to same-sex couples would facilitate tax evasion.
The petitioners further argued that the exclusion violates Article 15 of the Constitution, which prohibits discrimination on grounds of sex. Counsel submitted that their challenge was primarily founded on Article 15 rather than Article 14.
Warning against an adverse ruling, Sanghvi argued that it would push same-sex couples back into the shadows. They would be forced to “live in the indignity of financial opacity”, he submitted.
The dispute arose from a gift of a 22-karat gold bracelet from Godi to Kalia, which the couple described as a family heirloom. They contend that excluding same-sex partners from the exemption is unconstitutional.
They have asked the Court either to strike down the provision to that extent or interpret the term “spouse” to include same-sex couples in comparable circumstances.
At the previous hearing, Solicitor General Tushar Mehta, appearing for the Centre, opposed the petition, arguing that extending the term “spouse” to same-sex partners would effectively confer recognition on a matrimonial relationship that Indian law does not currently recognise.
Citing the Supreme Court's judgment in Supriyo v. Union of India, he submitted that the question of recognising same-sex marriage was for the legislature to decide. The Centre further argued that the exemption is linked to a legally recognised marital relationship and that extending its scope could create opportunities for tax evasion.
The matter has been posted to October 12, 2026 for further hearing.
For Petitioner: Advocate Varshitha K and Dr. Dhruv Janssen Sanghvi
For Respondents: Senior Advocates Tushar Mehta, Solicitor General of India, Aravind Kamath, Addl Solicitor General of India and Advocate Nirmal Mathew, Central Government Counsel