Gold Bracelet Gift Puts Same-Sex Couple’s Tax Rights Before Karnataka High Court

A gold bracelet exchanged between a Bengaluru-based same-sex couple has become the centre of a significant tax dispute before the Karnataka High Court (KHC), raising questions over how India’s income-tax law treats gifts between partners whose relationship is not legally recognised as marriage.

The petition has been filed by Anurag Kalia and Akhilesh Godi, both IIT alumni who work as software engineers. The couple have been together for more than seven years and have lived together since 2019 in a jointly owned home.

The dispute arose after Godi gifted Kalia a 22-karat gold bracelet weighing 14.41 grams on their relationship anniversary. The bracelet, valued at Rs 1,15,500, was a family heirloom that Godi had earlier received from his father.

Why The Gift Became A Tax Issue

Under Section 56(2)(x) of the Income Tax Act, money or specified property received without consideration can become taxable as “income from other sources” when the prescribed threshold is crossed. Gifts received from a “relative”, however, are exempt. The definition of relative includes the spouse of an individual, according to a recent report by News18.

Since Indian law does not recognise the two men as spouses, Kalia was advised that the bracelet would have to be valued, disclosed as income and taxed. Their petition says this creates unequal treatment because a gift between legally recognised spouses would ordinarily fall within the relative exemption.

The couple has challenged the provision on constitutional grounds, arguing that denying the benefit to same-sex partners amounts to discrimination and violates their right to equal protection under the law.

They have also clarified that they are not asking the court to recognise their relationship as a marriage or declare them married. Their challenge is narrower: whether the tax exemption can exclude a same-sex conjugal relationship simply because the partners cannot obtain legal marital status.

Centre Defends Existing Definition Of ‘Relative’

The Union government has opposed the plea. Appearing before the High Court, Additional Solicitor General Aravind Kamath argued that the tax exemption is based on legally verifiable relationships such as marriage and blood ties, rather than on the sex of the people involved.

The Centre’s position is that these clearly defined relationships allow tax authorities to verify whether a gift qualifies for exemption without having to investigate the nature or stability of personal relationships.

Justice B M Shyam Prasad also observed during the hearing that expanding the statutory definition through judicial interpretation could create uncertainty over which relationships should qualify.

The case therefore goes beyond one gold bracelet. At its core is a larger question: can a tax benefit tied to the word “spouse” operate equally when one class of couples has no legal route to become spouses?

The KHC is expected to continue hearing the matter on August 4.

FAQs

1. Why did the gold bracelet gift become a tax issue?

Under Section 56(2)(x), certain gifts can be taxable unless received from a defined “relative”. Since same-sex partners are not legally recognised as spouses, the exemption may not apply.

2. What has the same-sex couple challenged before the Karnataka High Court?

They have challenged the exclusion of same-sex partners from the tax exemption available to spouses, arguing that it results in unequal treatment.

3. What is the Centre’s stand on the case?

The Centre argues that the exemption is based on legally verifiable relationships such as marriage and blood ties, and not on the sex of the individuals involved.