In a significant move for LGBTQ+ rights, a same-sex couple has approached the Bombay High Court to challenge a provision in the Income Tax Act that governs the taxation of gifts. They argue that the current law unfairly denies them benefits that are automatically available to heterosexual couples.
The dispute arises from Section 56(2)(x) of the Act. According to this section, any financial gift, property, or asset worth more than ₹50,000 is treated as taxable income if it is received without valid consideration. While the law excludes gifts from certain relatives, including spouses, the Act does not provide any definition of the term "spouse." Because of this omission, same-sex partners - even in stable and long-term relationships - cannot claim the exemption.
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The petition highlights: "When the law recognises marriage-like stability, it should not matter whether the relationship is heterosexual or same-sex."
A division bench of Justices B.P. Colabawalla and Firdosh Pooniwalla, after considering the plea, issued a notice to the Attorney General of India on August 14. The matter has been scheduled for further hearing on September 18.
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Through this petition, the couple is asking the court to interpret the word "spouse" in a gender-neutral and inclusive way, so that tax exemptions extend equally to same-sex partners. They argue that denying this benefit is a violation of equality under the Constitution.
This case adds another layer to India's evolving legal journey on LGBTQ+ rights. From the Supreme Court’s 2018 ruling that decriminalised same-sex relationships to ongoing debates around marriage equality, the present challenge before the Bombay High Court could play a pivotal role in shaping equal treatment under taxation law.
