The recent order of the Bombay High Court has brought significant attention to the treatment of same-sex couples under the Income-tax Act, 1961. In a case that challenges the constitutional validity of Section 56(2)(x), the Court refused to grant interim protection to a same-sex couple seeking exemption from gift tax on the ground that they should be treated as \u201cspouses\u201d.<\/p>\n\n\n\n
The decision highlights a crucial gap in Indian tax law\u2014same-sex couples are not legally recognised as \u201cspouses\u201d<\/strong>, and therefore\u00a0cannot claim the gift-tax exemption available to married couples<\/a><\/strong>. This has direct implications for high-value transactions, gift-tax litigation, and income-tax notices issued under AY 2024-25 and upcoming assessment cycles.<\/p>\n\n\n\n This article summarises the case, the legal issues involved, and the practical impact for taxpayers and consultants.<\/p>\n\n\n\n A same-sex couple approached the Bombay High Court challenging the constitutionality of Section 56(2)(x) of the Income-tax Act, which taxes gifts exceeding \u20b950,000 received from non-relatives.<\/p>\n\n\n\n The fifth proviso to Section 56(2)(x) exempts gifts received from certain \u201crelatives\u201d, including a \u201cspouse\u201d<\/strong>. The petitioners argued that:<\/p>\n\n\n\n The Division Bench refused to grant interim relief, stating that:<\/p>\n\n\n\n Result:<\/strong> Any monetary gift, immovable property, or movable property transferred between partners is taxable under Section 56(2)(x), unless a different exemption applies.<\/p>\n\n\n\n Cases of unreported gifts or unexplained credit entries may attract:<\/p>\n\n\n\n Given the current legal position, taxpayers in same-sex relationships must maintain strong documentation of:<\/p>\n\n\n\n Without \u201cspouse\u201d status:<\/p>\n\n\n\n If the High Court eventually rules in favour of recognition, taxpayers may seek:<\/p>\n\n\n\n However, as on date, no exemption exists<\/strong>.<\/p>\n\n\n\n This case opens an important chapter in how tax law intersects with equality rights and evolving social norms. For\u00a0Income Tax Notice Consultants<\/a><\/strong>,\u00a0ITR-U filing experts<\/a><\/strong>, and\u00a0Tax Litigation Professionals<\/a><\/strong>, the matter has immediate relevance because:<\/p>\n\n\n\n As per current legislation, no tax professional can advise exemption for gifts between same-sex partners<\/strong>, unless the law is amended or the Court issues a favourable ruling.<\/p>\n\n\n\n Petitioners: Payio Ashiho & Vivek Divan (same-sex couple)\u00a0LawFul Talks+2The Indian Express+2<\/a> #IncomeTax #TaxConsultant #Section56 #GiftTax #BombayHighCourt #TaxNotice #FacelessAssessment #IncomeTaxUpdate #TaxAdvisory #IndianLaw #CAinIndia #CAinDwarka #CAinDelhi #CAAlokkumar #TaxConsultant #TaxNoticeConsultant #LGBTQIA #TaxCompliance Income Tax Notice<\/a>, Section 56(2)(x), Gift Tax, Spouse Definition, Tax Dispute, Income Tax Litigation, Tax Compliance, Gift Tax Exemption, Same-Sex Couple Taxation.<\/strong><\/em><\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" The Bombay HC has refused interim relief to a same-sex couple challenging the exemption for gifts from \u201cspouse\u201d under Section 56(2)(x) of the IT Act. The recent order of the…<\/p>\n","protected":false},"author":1,"featured_media":1255,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1254","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax-act-1961"],"_links":{"self":[{"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/posts\/1254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/comments?post=1254"}],"version-history":[{"count":1,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/posts\/1254\/revisions"}],"predecessor-version":[{"id":1256,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/posts\/1254\/revisions\/1256"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/media\/1255"}],"wp:attachment":[{"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/media?parent=1254"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/categories?post=1254"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/caalokkumar.com\/my-writing\/wp-json\/wp\/v2\/tags?post=1254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\n\n\nBackground of the Case<\/strong><\/h2>\n\n\n\n
Since Indian law does not legally recognise same-sex marriage or civil unions, gifts exchanged between same-sex partners do not qualify<\/strong> for this exemption.<\/p>\n\n\n\n\n
\n\n\n\nWhat the Bombay High Court Held<\/strong><\/h2>\n\n\n\n
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Same-sex couples remain outside the exemption framework of Section 56(2)(x) of Income Tax Act 1961, and any gift received from a partner is taxable.<\/strong><\/p>\n\n\n\n
\n\n\n\nLegal Position Under Section 56(2)(x) \u2013 Current Status<\/strong><\/h2>\n\n\n\n
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\n\n\n\nImplications for Same-Sex Couples and Taxpayers<\/strong><\/h2>\n\n\n\n
1. Gifts from same-sex partners remain taxable<\/strong><\/h3>\n\n\n\n
2. High risk of receiving Income-tax Notices<\/strong><\/h3>\n\n\n\n
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3. Tax planning complexities<\/strong><\/h3>\n\n\n\n
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4. Possible refund later<\/strong><\/h3>\n\n\n\n
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\n\n\n\nWhy This Case Matters for Tax Practitioners & Consultants<\/strong><\/h2>\n\n\n\n
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\n\n\n\nKey Takeaways<\/strong><\/h2>\n\n\n\n
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Respondents: Union of India & the Income\u2011tax Department\u00a0LawFul Talks+2Taxscan+2<\/a>
Case title:\u00a0\u201cPayio AshIho & Anr. v. Union of India & Anr., Writ Petition (L) No. 24345 of 2025\u201d<\/em>\u00a0(as per one report)\u00a0LawFul Talks<\/a>
Bench\/Judges: Justices B.P. Colabawalla and Firdosh Pooniwalla.\u00a0Mid-day+2The Indian Express+2<\/a>
Provision challenged: Fifth proviso to Section 56(2)(x) of the Income\u2011tax Act, 1961 (exemption for gifts from \u201cspouse\u201d and other relatives)\u00a0ETGovernment.com+1<\/a>
Key issue: Whether the term \u201cspouse\u201d in that proviso should include same-sex couples or if its exclusion violates Articles 14\/15 of the Constitution.\u00a0<\/p>\u201cPayio AshIho & Anr. v. Union of India & Anr., Writ Petition (L) No. 24345 of 2025\u201d<\/a><\/em><\/cite><\/blockquote><\/figure>\n\n\n\n