Income Tax Department opposes same-sex couple’s plea for tax exemption on gifts

The Income Tax Department has filed an affidavit before the Bombay High Court opposing a plea by a same-sex couple challenging Section 56(2)(x) of the Income Tax Act, which grants exemption from tax on gifts between spouses, and seeking to extend the benefit to their relationship.

The affidavit, dated October 14, 2025, was filed before a Division Bench of Justices Burgess Colabawalla and Firdosh Pooniwalla by Sandeep Dahiya, Principal Commissioner of Income Tax (Judicial). The department has urged the Bench to dismiss the petition as “misconceived”. According to the department, the petitioners are attempting to use the Income Tax Act to alter the meaning of “spouse” under the Act, a term that is not recognised for same-sex relationships under any marriage law in India. The department stated that the petitioners have not cited any law recognising their relationship as a marriage or recognising them as spouses and are instead asking the Income Tax Act to provide a definition of marriage or spouse that is contrary to the definitions under various marriage laws.

The department has contended that the writ petition constitutes an abuse of the legal process, as the relief sought does not pertain to the provisions of the Income Tax Act. The affidavit further stated that marriage or spousal relationships between same-sex couples are not recognised under any marriage law in India and, therefore, the exemption under Section 56(2)(x) cannot be extended to them. The department has maintained that the interpretation of “spouse” must align with the marriage laws in India and that the Income Tax Act cannot define the term contrary to those laws.

The department has argued that the petitioners are seeking a change in the definition of “spouse” under the Income Tax Act without any supporting legislation recognising their relationship as a marriage. It has also submitted that the petition is an abuse of the process of law because the relief sought has no connection with the provisions of the Income Tax Act. The department has urged the court to dismiss the plea, reiterating that the exemption on gifts between spouses applies only to relationships recognised as marriages under Indian law. The court is yet to pronounce its order on the matter.