Why a same-sex couple is challenging the income tax law that exempts gifts only between spouses? Explained
A same-sex couple has challenged a provision of the income tax law that exempts gifts exchanged between spouses from taxation but excludes LGBTQ+ couples from the benefit as their marriages are not legally recognised in India.
The Karnataka High Court has sought a response from the Union government on a petition filed last year by Bengaluru-based software engineers and IIT alumni Anurag and Akhilesh, who have been living together for the past seven years.
Justice B Shyam Prasad issued the notice while hearing the case and now the matter is scheduled for further hearing on July 15, 2026, according to a news report by The Economic Times.
Why did the couple take the legal route?
The issue stems from a 15-gram gold bracelet that Akhilesh gifted to Anurag. The jewellery piece was valued at more than ₹1 lakh, hence the couple disclosed it in their respective income tax returns (ITRs).
However, unlike gifts exchanged between legally recognised spouses, it was treated as taxable because the exemption available for gifts received from a “relative” does not extend to same-sex partners under the current law.
As per Section 56(2)(x) of the Income-tax Act, any money or property worth more than ₹50,000 received without consideration is taxed as “income from other sources.” However, gifts received from specified “relatives” such as parents, spouse and siblings are exempt from tax.
The definition of “relative” includes the “spouse of an individual,” making money and other assets tax-free if gifted to the other individual in accordance with the prescribed tax rules.
Petition says same-sex couples deserve equal tax treatment as spouses
The petitioners argue that the income tax law discriminates against same-sex couples by denying them the same tax exemption available to married heterosexual couples, in violation of Articles 14 and 15 of the Constitution, which guarantee equality before the law and prohibit discrimination.
According to the plea, same-sex couples in long-term relationships should be treated on par with married heterosexual couples for the purpose of tax exemptions. It contents that excluding same-sex partners from the definition of “spouse” under the Income-tax Act results in unequal treatment and asks the court to declare the provision unconstitutional.
The couple has specifically challenged the constitutional validity of the provision in the Income-tax Act, 1961, that exempts gifts exchanged between spouses from taxation while effectively excluding same-sex couples from the same benefit, the news publication reported.
To support of their case, the petitioners have cited previous Supreme Court rulings, including the Shiramabai vs OIC Records judgment, which held that long-term cohabitation gives rise to a strong legal presumption of a valid marriage. They argue that the principle should also guide the interpretation of tax benefits for couples in long-term same-sex relationships.
