‘Cannot offer tax cuts to same-sex couples’: Centre tells Karnataka High Court

The Union government opposed giving same-sex couples the gift-tax exemption available to legally recognised spouses. It told the Karnataka High Court that the Income Tax Act relies on legally recognised relationships, and Indian law does not recognise same-sex couples as spouses. The dispute therefore concerns the legal meaning of “spouse” in a tax provision.

The case involves Bengaluru residents Anurag Kalia and Akhilesh Godi. Godi gifted Kalia a 22-karat gold bracelet, a family heirloom. The couple said the gift raised a tax problem because the exemption covers gifts between spouses, but not their relationship. The Centre said tax law cannot be used to obtain a benefit linked to a status marriage law does not provide.

The government also warned that extending the exemption could create scope for tax evasion. The petitioners argue that the exclusion is discriminatory and penalises them for expressing love. The High Court will hear the matter again on November 2 for technical clarifications.

The provision at issue is Section 56(2)(x) of the Income Tax Act, 1961. As described in the article, it contains an exemption for gifts between “spouses.” That means a gift falling within this relationship-based category is not given the same tax treatment as a taxable gift. The dispute is about who qualifies as a spouse under the provision.

The petitioners challenged the fifth proviso to Section 56(2)(x). They say it creates indirect discrimination because married couples can exchange gifts without the same tax burden, while same-sex partners cannot access that exemption. The government reads “spouse” according to legally recognised relationships and says same-sex partners do not qualify.

The proviso does not itself recognise same-sex relationships, according to the Centre. The petitioners ask the court to declare it unconstitutional and to address the exclusion of same-sex partners. The High Court has not yet decided the challenge and is seeking technical clarifications.

The case concerns a specific relationship-based exemption, not a universal rule for every gift. The article says the fifth proviso to Section 56(2)(x) exempts gifts between “spouses” from tax. The key question is whether same-sex partners can be treated as spouses for this provision, not whether all gifts should receive identical treatment.

The concrete example is a 22-karat gold bracelet that Akhilesh Godi gave Anurag Kalia. Because they are same-sex partners rather than legally recognised spouses, they say the gift may face a tax burden that a married couple exchanging a comparable gift would avoid. The article does not state the bracelet’s value or the exact tax amount.

The Centre says the exemption follows marital status recognised by law. The petitioners argue that the distinction is discriminatory in this particular tax setting. The High Court must decide whether the exclusion can stand, and it will first hear technical clarifications on November 2.

The government’s position is that the tax exemption depends on marital status, rather than simply on the sexes of the people involved. Since Indian law does not recognise same-sex couples as spouses, the Centre says the Income Tax Act cannot independently provide them with a benefit reserved for spouses. The tax rule, in its view, follows the legal status created by marriage law.

The government told the court that extending the exemption would “indirectly recognise same-sex marriages.” It also said the change could “create scope for tax evasion.” Solicitor General Tushar Mehta had earlier argued that interpreting “spouse” to include same-sex partners would effectively recognise their relationship as a marriage under Indian law.

The petitioners take a narrower view. Their counsel says the case only asks whether a tax benefit can be denied because same-sex partners cannot legally marry. The High Court will consider the competing arguments after seeking technical clarifications on documents filed in the case.

The immediate tax consequence is unequal treatment of the gift. A gift between legally recognised spouses falls within the exemption described in the fifth proviso to Section 56(2)(x). A comparable gift between same-sex partners does not receive that spouse-based benefit under the Centre’s interpretation. The article does not state the bracelet’s monetary value or the exact tax payable.

The case began after Akhilesh Godi gave Anurag Kalia a 22-karat gold bracelet that was a family heirloom. While preparing their income-tax returns for the 2025–26 assessment year, they encountered the tax issue. They argued that the law effectively makes them pay tax for expressing love, even though married couples can exchange gifts without the same burden.

The government maintains that same-sex partners are not “spouses” under the law. The petitioners challenge that exclusion as unconstitutional. The High Court has not yet ruled on the tax treatment and is scheduled to seek technical clarifications on November 2.

The petitioners’ argument focuses on unequal treatment, not only on marriage recognition. They say the tax law gives married couples a benefit because they are called spouses, while same-sex partners are denied that benefit solely because they cannot legally marry. In their view, that difference burdens their relationships and treats their expression of love less favourably.

Their example is personal and concrete. Akhilesh Godi gave Anurag Kalia a 22-karat gold bracelet, a family heirloom. The couple said they faced a tax issue when preparing their returns for the 2025–26 assessment year. Their counsel, Dhruv Jhanssen-Sanghvi, told the court that the law effectively penalises them for expressing love, while married couples can exchange gifts without the same tax burden.

The government says same-sex relationships are not equivalent to marriage and that the exclusion follows legally recognised status. The petitioners say marital status cannot automatically justify every legal distinction. The High Court must decide whether this particular tax distinction is justified.

The article presents equality as a question of fit. A law may distinguish between groups, but the government must explain why that distinction serves the purpose of the particular law. The relevant issue is therefore not simply whether marriage has a legal status, but whether that status reasonably justifies different tax treatment for gifts in this setting.

The petitioners’ counsel, Dhruv Jhanssen-Sanghvi, argued that the case is narrower than the Supreme Court’s 2023 decision in Supriya Chakraborty versus Union of India. He said the High Court only needs to examine whether a spouse-related tax benefit can be denied to same-sex partners solely because they cannot legally marry. He also said marital status cannot automatically justify every distinction.

The Centre responds that the exemption rests on legally recognised marriage and that same-sex partners are not spouses under the law. The High Court must weigh those positions. The article says the court will next seek technical clarifications, not that it has already decided the equality question.