Challenge to Income Tax Act's Definition of 'Spouse' for Same-Sex Couples

Bombay HC to Hear Same-Sex Couple’s Plea on Tax Definition of ‘Spouse’

A same-sex couple has moved the Bombay High Court challenging a gap in the Income Tax Act that, they argue, unfairly excludes them from exemptions available to heterosexual partners.

The petition centres on Section 56(2)(x), which taxes gifts of money or property worth more than ₹50,000 unless they are received from a defined set of “relatives.” The exemption list includes a “spouse” — but the Act does not define the term, and in practice it has been interpreted narrowly to mean only heterosexual married couples.

What the Petitioners Seek

The couple has stressed that their plea is not about legal recognition of same-sex marriage. Instead, they are asking the court for:

• Parity in tax treatment so that long-term, committed relationships are not penalised.
• Gift tax exemption on financial transfers between partners, just as spouses enjoy under existing rules.
• Protection from reassessment or penalties that might arise from the current restrictive reading of the law.

Court’s Initial Response

On August 14, a bench of Justice B. P. Colabawalla and Justice Firdosh Pooniwalla noted the constitutional importance of the issue and issued notice to the Attorney General of India. The matter will next be heard on September 18, 2025.

Why This Case Matters

If the petition succeeds, it could mark a significant step toward financial equality for LGBTQIA+ individuals in India, particularly in areas such as asset transfers and inheritance planning.

Tax experts point out that modernising the definition of “spouse” would be consistent with the Supreme Court’s 2018 ruling decriminalising same-sex relationships, while also bringing tax law closer to the principle of equal protection under the Constitution.