Karnataka High Court hears plea on income tax benefits for same-sex couples

The Karnataka High Court on Friday heard arguments challenging the exclusion of same-sex couples from spouse-related tax benefits under the Income Tax Act, 1961. The petitioners argued that denying them the tax treatment available to heterosexual spouses amounts to discrimination based on sex and violates Article 15 of the Constitution.

According to LiveLaw, counsel Dr Dhruv Janssen-Sanghavi told Justice B M Shyam Prasad that the case concerns equality before the law, not a demand for legal recognition of same-sex marriage.

The petition challenges the interpretation of ‘spouse’ under the Fifth Proviso to Section 56(2)(x) of the Income Tax Act, which governs the tax treatment of certain gifts. The petitioners contend that same-sex partners are excluded from the benefit available to heterosexual spouses.

The case arose from a 22-karat gold bracelet, described as a family heirloom, allegedly gifted by one partner to the other on their relationship anniversary. The petitioners argued that the gift would have received different tax treatment had they been a heterosexual married couple.

Janssen-Sanghavi argued that the law's impact, rather than the wording of the provision alone, is at the heart of the challenge. He maintained that couples in comparable circumstances should not receive different treatment solely because of their sex.

The respondents have argued that the term ‘spouse’ must be interpreted strictly under tax law and that same-sex couples cannot claim the benefit without legal recognition of their relationship as a marriage.

The petitioners also addressed the Supreme Court's judgment in Supriyo v. Union of India, which rejected the existence of a fundamental right to marry or to legal recognition of same-sex unions. Their counsel argued that the present case raises a separate question about equal treatment under tax law.

The respondents have also raised concerns about the possibility of tax avoidance if the benefit is extended to same-sex couples. The petitioners countered that the potential for misuse cannot justify discrimination.

The challenge asks the court to examine whether excluding same-sex couples from the relevant tax benefit is constitutionally valid, even in the absence of legal recognition of same-sex marriage.