Prateek Tanmay
When is a gift from your partner just a gift — and when is it “income from other sources”?
For same-sex couples in India, the answer currently turns on a single, undefined word in the Income Tax Act: “spouse.” And now, a Bengaluru couple has taken that word to court.
The Karnataka High Court on Tuesday sought a response from the Central Government on a writ petition filed by Anurag Kalia and Akhilesh Godi, both IIT alumni, who have challenged the Constitutional validity of the “fifth proviso” to Section 56(2)(x) of the Income Tax Act, 1961. The provision exempts gifts between “spouses” from tax but a plain reading, or the literal meaning of the term in legal parlance, excludes same-sex couples.
The dispute began with a 22-karat gold bracelet weighing 14.41 grams. Godi, who had received it from his father as a family heirloom, gifted it to Kalia on the anniversary of their relationship. The couple declared the bracelet’s estimated value as Rs 1,15,500.
As per Section 56(2)(x), any money or property worth more than Rs 50,000 received without consideration is taxable as “income from other sources”. The proviso carves out gifts received from a “relative” — a term the Act defines, for an individual, to begin with the “spouse of the individual”.
Had the two men been a married couple, or even an unmarried heterosexual couple presumed to be married by virtue of long cohabitation, the bracelet would not have counted as income at all, and would not even have had to be disclosed in a tax return.
Instead, while preparing his returns for 2025-26, Kalia was advised that he must have the bracelet valued by a registered valuer, report its fair market value as income, and pay tax on it at 25%, plus a 15% surcharge and 4% cess, according to their petition.
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The petitioners, who work as software engineers in Bengaluru, told the court that they have been together for more than seven years — cohabiting since 2019 with a jointly owned house in the city. The petition also states that they seek neither recognition nor presumption of marriage, nor any declaration of marital status.
A line of decisions, dating back to a 1927 ruling by the Privy Council in A Dinohamy v. Balahamy, holds that if a man and woman are proved to have lived together as husband and wife for a prolonged period, the law will presume they are validly married, rather than partners lacking full legal rights and inheritance privileges. The plea by Kalia and Godi also cited Supreme Court rulings, as recent as 2023 in Smt. Shiramabai v. OIC Records, to argue for recognition of their relationship.
They argued that a heterosexual couple in the petitioners’ circumstances would therefore qualify as “spouses”, and hence “relatives”, under the tax exemption. The petitioners argued that they are denied the same benefit “solely on the basis of sex”, in violation of Articles 14 and 15 of the Constitution, with consequent violations of Articles 19(1)(a) and 21, by taxing “an expression of love and affection”.
In a landmark ruling in 2018, the Supreme Court had held that “sex” under Article 15 includes sexual orientation.
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Justice B M Shyam Prasad, who briefly heard the matter in the Karnataka High Court, narrowed the case to a single issue: when the legislature has chosen not to define “spouse”, can a court enlarge the term’s scope through judicial interpretation?
“We intend to hear only on this aspect. If the enactment says the receipt in the hand of these only would not be income from other sources, how do we say it is discriminatory? The moment we say it is discriminatory, a door is open,” the court said in an oral observation.
The court also asked whether the definition’s meaning or scope could be extended to relatives of any kind: “There could be foster sons or foster daughters.”
A similar challenge to the provision, filed by Payio Ashiho and his partner Vivek Divan, is also pending before the Bombay High Court.
