‘Tax exemption based on marriage or relation’: Centre opposes same-sex couple’s plea

Kamath discussed the definition of ‘relative’ as outlined in clause vii of Section 56(2) of the Act regarding who can claim tax exemption on gifts received.

“It is based on a legally verifiable family relationship called marriage for which the parliament has separate law and direct family status like–a sibling, so that if there is a dispute of a particular transfer of property, it can be verified by the authority with least intrusion into the status of the relative.”

Stating that petitioners, Anurag Kalia and Akhilesh Godi, both IIT alumni, in their plea claim to be in a stable relationship, Kamath argued, “What is meant by it (stable relationship), can an assessing officer inquire into it.”

“Which is why Parliament has confined the relationship to legally verifiable relationships like marriage and blood relations which can be easily verified with least intrusion into the status.”

Justice B M Shyam Prasad orally said, “Your submission is that Parliament in its wisdom has carved out the exception so that nobody abuses it and it is to ensure that specific relationships are elaborately defined on the basis of verifiable legal status either by marriage or by blood. Today, if we read down the provision, we will introduce uncertainty.”

Advocate Dhruv Janssen-Sanghavi, who appeared for the couple, has earlier argued that they are not saying that the use of the term spouse is unconstitutional, but rather the reference to the term spouse refers to an indirect discrimination.

Sanghavi had argued that in the present case, there is no genetic relationship between the two petitioners; the relationship between them is conjugal. The use of the word spouse reserves an indirect discrimination, which excludes the petitioners and denies them the equal protection of the law. Further, the petition states that they seek neither recognition nor presumption of marriage, nor any declaration of marital status.

Case background

The petitioners, who work as software engineers in Bengaluru, have 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 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.

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 per cent, plus a 15 per cent surcharge and 4 per cent cess, according to their petition. Thus they moved the court seeking to declare the provision as unconstitutional.

The plea states 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”.

The petitioners have sought to declare that the benefit of the fifth proviso to Section 56(2)(x) of the Act be equally available to them.

The court will continue hearing the plea on August 4.