- The Karnataka High Court is reviewing whether Section 56(2)(x) unfairly denies a tax exemption to same-sex partners.
- The dispute centers on a 15-gram gold bracelet valued above Rs 1 lakh, far over the Rs 50,000 threshold.
- A separate Bombay High Court case is pending, with the next hearing listed for July 30, 2026.
(KARNATAKA, INDIA) — Section 56(2)(x) of the Income Tax Act, 1961 remains under constitutional challenge after a same-sex couple questioned its treatment of gifts between partners.
The Karnataka High Court is considering whether the provision unlawfully denies a tax exemption because Indian law does not recognize same-sex partners as spouses. The next hearing is scheduled for July 15, 2026.
The dispute concerns a 15-gram gold bracelet that Akhilesh Godi gave to Anurag Kalia. The bracelet was valued at more than Rs 1 lakh for tax reporting purposes.
Free toolCSPA Age-Out Calculator OnlineSection 56(2)(x) generally taxes money or property received without consideration when its value exceeds Rs 50,000. The amount is normally reported under “income from other sources.”
The provision creates an exemption for gifts from specified relatives. The statutory definition includes a spouse. Same-sex partners cannot currently claim that exemption as spouses because Indian law does not recognize their relationship as marriage.
Kalia and Godi argue that the distinction violates Articles 14 and 15 of the Constitution. Their petition says a heterosexual married couple could transfer the same bracelet without the same tax treatment.
How Section 56(2)(x) operates
The provision applies when a person receives money, immovable property, or specified movable property without paying consideration. Gold and other movable assets can fall within the rule.
A gift exceeding the threshold is not automatically taxable in every situation. The law excludes gifts from specified relatives, gifts received on certain occasions, and several other categories.
The relative exemption is central to the Karnataka case. The provision recognizes a spouse, along with other listed family relationships, but does not expressly include an unmarried partner.
| Issue | Current position | Effect in the Karnataka dispute |
|---|---|---|
| Gift threshold | More than Rs 50,000 | The bracelet reportedly exceeded the threshold |
| Tax category | Income from other sources | The recipient may face taxable income |
| spouse exemption | Available to a recognized spouse | Same-sex partners cannot currently claim it as spouses |
| Constitutional challenge | Articles 14 and 15 cited | The petition contests unequal treatment |
The challenged rule does not create a special tax rate for same-sex couples. Its effect arises from the relationship requirement. A transfer that falls within the spouse exemption for one couple may be taxable for another couple.
⚠️ Warning: A private commitment ceremony, partnership agreement, or shared household does not currently establish “spouse” status under Section 56(2)(x).
The Karnataka High Court petition
Justice B. Shyam Prasad has sought the Union government’s response. The petition remains pending, and no final ruling has changed the statutory treatment of same-sex partners.
The petitioners contend that the law taxes the recipient solely because the state does not recognize the couple’s marriage. They seek relief against the application of the spouse-based exemption.
The reported value of the bracelet exceeds the statutory threshold by more than Rs 50,000. If the exemption does not apply, the recipient must examine whether the value belongs in taxable income for the relevant year.
Valuation records, purchase documents, transfer evidence, and tax filings may become important. A taxpayer should preserve those records even if the constitutional challenge remains unresolved.
The next Karnataka hearing is listed for July 15, 2026. That hearing does not itself guarantee a final judgment or suspend the operation of Section 56(2)(x).
A similar case in Bombay
A separate petition is pending before the Bombay High Court. Payio Ashiho and Vivek Divan have raised a similar challenge to the same statutory treatment.
The Income Tax Department filed its affidavit on October 14, 2025. Final arguments were initially scheduled for July 9, 2026.
On July 6, 2026, the Bombay High Court granted a final adjournment. The matter is now listed for July 30, 2026, at 3:00 p.m.
Justice B.P. Colabawalla and Justice Firdosh Pooniwalla are hearing the Bombay petition. Its outcome could develop separately from the Karnataka proceeding.
| Feature | Karnataka case | Bombay case |
|---|---|---|
| Petitioners | Anurag Kalia and Akhilesh Godi | Payio Ashiho and Vivek Divan |
| Provision challenged | Section 56(2)(x) | Section 56(2)(x) |
| Constitutional grounds | Articles 14 and 15 | Articles 14 and 15 |
| Procedural position | Government response sought | Final arguments scheduled |
| Next listed date | July 15, 2026 | July 30, 2026, at 3:00 p.m. |
Tax filing and family-visa considerations
The cases concern Indian tax law, not United States federal tax law. A person filing a U.S. return must separately apply U.S. gift and income rules.
U.S. tax residency generally depends on the green card test or substantial presence test. Publication 519 explains those rules for resident and nonresident aliens.
A gift received by an individual is generally not income under U.S. federal rules. The donor may face separate gift-tax reporting issues, depending on the transfer and applicable exclusions.
Immigrants who sponsor relatives may also need financial records for Form I-864, Affidavit of Support. Indian tax filings do not replace U.S. tax transcripts when U.S. immigration authorities request them.
H-1B and L-1 workers who meet U.S. residency tests generally report worldwide income. F-1 and J-1 holders often receive limited substantial-presence exclusions, subject to visa history and tax rules.
Foreign gifts can also raise U.S. reporting questions. A large gift from a foreign person may require Form 3520, while foreign accounts can trigger FinCEN Form 114, known as FBAR.
The IRS international taxpayer portal provides current federal reporting information. Publication 519 is available through the IRS tax guide for aliens.
What taxpayers should do now
Indian taxpayers who received gifts from same-sex partners should not assume the pending petitions create an automatic exemption. They should review the applicable assessment year and filing position with an Indian tax professional.
Records should identify the donor, recipient, transfer date, asset description, valuation method, and relationship between the parties. Bank records and purchase invoices can support the reported value.
Taxpayers with U.S. immigration ties should keep Indian returns, tax payment records, and valuation documents. Those records may help explain foreign income, assets, or transfers during a U.S. filing or immigration review.
📅 Action timeline: Track the Karnataka hearing on July 15, 2026, and Bombay arguments on July 30, 2026. Do not delay an applicable tax filing while awaiting either case.
Tax year 2026 generally refers to U.S. income earned during 2026 and reported on returns filed in 2027. The Indian dispute must be matched to the relevant Indian assessment year, which may follow a different calendar.
Taxpayers should calculate any reporting obligation under the law currently in force, preserve supporting records, and seek advice before amending a return or claiming relief based on a court petition.
⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.
