From Policing Love to Taxing It: The Indian Sexual State

For thirty years after decriminalisation was first demanded, the Indian state policed queer love through the criminal code. Now that Section 377 is gone, the discrimination survives in a quieter ledger: the tax return. A detailed analysis of India's "gay tax", the court cases challenging it, and what the fiscal exclusion of queer families costs, in dignity and in rupees.

In 1991, a mother in South Delhi learnt that her son was gay. Her first reaction, she later told an activist documenting queer lives, was not fear for his safety or grief for imagined grandchildren. It was, in her own words: "What will happen to my gold bangles!" (Less Than Gay, p. 12). The anecdote sits almost unnoticed in India's first citizens' report on homosexuality, but the instinct it captures is profound. In the Indian family, love is never only love. It is also property: gold that moves down generations, marking who belongs and who inherits.

Thirty-five years later, a 22-carat gold bracelet is before the Karnataka High Court. Akhilesh Godi received it from his father, a family heirloom of 14.41 grams, and gave it to Anurag Kalia, his partner of more than seven years, on their anniversary. Its assessed worth is Rs 1,15,500, about US$1,200. Had Godi given it to a wife, the Income-tax Department would have had no claim on it. Because he gave it to a man, the law treats Kalia as a stranger who has received taxable income. The couple, both IIT-trained software engineers in Bengaluru, have asked the court to read the word "spouse" in India's income tax law to include a same-sex partner. A parallel petition by Payio Ashiho and Vivek Divan is pending before the Bombay High Court. Campaigners have started calling the underlying rule what it functions as: the gay tax.

This essay makes three arguments. First, that the gay tax is not an oversight but the latest instrument of what the sociologist Jyoti Puri calls the sexual state: a state that constitutes itself by governing intimacy. Second, that the shift from policing queer love to pricing it was mapped, almost clause by clause, by Indian queer activists decades ago, and that the movement's own archive shows the fiscal family was always the deeper battleground. Third, drawing on feminist economics and the ethics of care, that a tax code which recognises care only when it is notarised by heterosexual marriage is not merely unjust but analytically wrong about what families are and what they do.

The sexual state, from truncheon to tax return

Puri's Sexual States (2016) studied the long struggle over Section 377 of the Indian Penal Code and drew a conclusion that outlasts that provision: regulating sexuality is not something the state does incidentally, it is one of the ways the state produces itself. Arvind Narrain and Gautam Bhan, introducing the landmark anthology Because I Have a Voice, described the mechanism in 2005: those in power "create norms, rules and structures that enforce their vision of what is acceptable, and penalise all those that fall outside these rules" (pp. 3-4). The law's power, they noted following Foucault, was never mainly in prosecution. Section 377 was rarely used to convict consenting adults. Its real work was panoptic and everyday: it made queer people legible to the police, the doctor, the landlord and the family as presumptive criminals (pp. 7-8).

And it had a price list. Pawan Dhall's history of the decriminalisation campaigns records what every kothi and gay man cruising a park knew: the police "would often use Section 377 only as a threat to extort money or get sexual favours", with arrests resolved through "the payment of a small penalty" (pp. 7-8). Blackmail by families, partners and officials was among the first things Less Than Gay taught its readers about the law's import. Here is the continuity that the celebratory story of decriminalisation misses. Queer intimacy in India has been taxed for a very long time. Before 2018 the levy was informal, extracted at police stations and park gates under the shadow of the criminal law. After 2018 the informal levy lost its statutory anchor. What remains is the formal one: a tax code that prices the same intimacy through its definitions.

The criminal law and the fiscal law are not parallel systems; one inherited the other's function. When the Supreme Court read down Section 377 in Navtej Singh Johar (2018), the state lost its bluntest instrument for marking queer relationships as outside the legitimate order. But the marking itself persists wherever the statute book defines "family", "spouse", "relative", "dependant" or "heir". The sexual state did not retreat in 2018. It changed registers, from the truncheon to the tax return.

The fiscal family: an exclusion mapped in advance

None of this would have surprised the movement's own economists of the everyday. The remarkable fact about India's queer archive is how early it identified the fiscal family as the real terrain.

Start with Less Than Gay (1991), published by AIDS Bhedbhav Virodhi Andolan (ABVA) when the fight was supposedly about decriminalisation alone. ABVA framed its purpose as winning for gay men, lesbians and other sexual minorities "equal benefits of the laws on marriage, inheritance, adoption, and privacy" (pp. 4-5). Its Charter of Demands asked Parliament to amend the Special Marriage Act and to extend "all consequential legal benefits of marriage", including the right "to execute a partner's will, to inherit" (Demand 15, p. 69). And then, extraordinarily, Demand 16: failing marriage, the state should "legally recognize and encourage friendship agreements between single people of the same sex as a valid way of organizing family life" (p. 69). In 1991, India's first queer rights document offered the state a non-marital route to recognising queer economic life. The state has now spent thirty-five years declining both routes.

By 2002, the mapping was forensic. Mihir Desai's chapter in Humjinsi, the movement's resource book, showed that beyond Section 377 "no other laws directly deal with homosexuals... The covert discrimination against homosexuals, however, runs throughout the gamut of laws", operating through two premises: family law recognises only cross-sex marriage, and every entitlement triggered by death or dependency is routed through "relations by marriage and blood" (p. 93). He then walked the statute book. The Employees' Provident Fund scheme voids any nomination in favour of a person outside the "family", defined through wife, husband and children (Regulation 61 read with 2(g)); the Payment of Gratuity Act does the same (Sections 6 and 2(h)); the Workmen's Compensation Act's "dependants" and the Employees' State Insurance Act's "family" are drawn from blood and marriage; under the Insurance Act, courts reduced the nominee to a mere collecting agent for the legal heirs, so a policy nominated to a partner still pays out to the natal family (pp. 95-98). A queer person could not even will a rent-controlled tenancy to a companion. Desai's conclusion was that contract cannot fix status: what was needed was to redefine "family", "heirs" and "legal representatives" across the law (p. 99). The 1997 Mumbai conference that produced Humjinsi had already analysed how Section 377 stymied reform of marriage, adoption and inheritance law and reached into "insurance, housing, and labour rights" (Dhall, p. 11).

The tax code is the purest expression of this architecture, because taxation is where the state writes down, in money, whose relationships it believes in. Consider the irony of timing. When Humjinsi was compiled, India had no gift tax at all: the donor-side Gift-tax Act of 1958 was abolished for gifts made after September 1998. The gay tax is younger than the modern queer movement. Parliament rebuilt gift taxation on the recipient's side in 2004, broadened it in 2009, and universalised it in 2017 as Section 56(2)(x) of the Income-tax Act, 1961. The design is simple: if the money and property you receive without consideration in a year exceeds Rs 50,000 (about US$525), the whole amount is taxed as your income at slab rates, up to 30 per cent plus surcharge and cess. Then come the exemptions that define the fiscal family: gifts received from a "relative" are exempt without limit, and "relative" begins with the spouse; so are gifts on the occasion of marriage, and property received by will or inheritance. Every exempt category runs through marriage or blood. A husband may settle a crore on his wife untaxed. Partners of twenty years are, in the Act's eyes, two strangers transacting.

The same architecture runs through the code's benefits side: deductions for insurance premia and medical cover paid for a spouse, the tax-free status of employer benefits extended to a spouse, even the anti-avoidance clubbing rules of Section 64, which treat husband and wife as one economic unit precisely because the law assumes their finances are merged. The code sees married couples so completely that it polices their internal transfers. It refuses to see queer couples at all.

And the exclusion has just been re-enacted with open eyes. The Income-tax Act, 2025, which replaced the 1961 Act from April 2026, was Parliament's first full rewrite of income taxation in over sixty years. Its gift provision, Section 92, carries forward the Rs 50,000 threshold, the "relative" exemption and the spousal definition unchanged. A legislature that had been told by the Supreme Court in 2023 that queer couples face material discrimination copied the discriminating clause into the next half-century of law.

Two couples, one catch-22

The litigation now unfolding is deliberately, almost provocatively, modest. Godi and Kalia in the Karnataka High Court, and Ashiho and Divan in the Bombay High Court (Writ Petition 3784 of 2025), are not asking for marriage. They ask only that "spouse" in the gift-tax proviso be read to include a same-sex partner, so that a bracelet, a birthday transfer, a shared down-payment is not taxed as a stranger's windfall. The constitutional scholar Tarunabh Khaitan, who more than two decades ago co-wrote Humjinsi's analysis of the medicalisation of homosexuality, points out that the Income-tax Act nowhere defines "spouse", which makes the term apt for judicial interpretation guided by the equality and liberty guarantees.

The Union government's response, in an affidavit filed by the Income-tax Department in October 2025, was that the petition is "misconceived" and "an abuse of the process of the law", because the petitioners seek the benefit of "spouse" "without first getting their relationship legally recognised as 'marriage/spouse/wife-husband'". Read that sentence twice. The same Union government successfully argued in Supriyo v. Union of India (2023) that the Supreme Court should not, and then that Parliament need not, recognise their relationship. Having barred the door to marriage, it now points to the locked door as the reason they cannot claim what lies behind it. This is not an argument; it is the catch-22 as fiscal policy.

Supriyo itself makes the government's litigating position harder to defend. The Court declined, three to two, to recognise a right to marry, but the judgment recorded the Union's own undertaking to constitute a high-powered committee under the Cabinet Secretary to secure the everyday entitlements of queer couples, and the minority opinion of Chief Justice D.Y. Chandrachud expressly listed income tax benefits among the exclusions that wound queer citizens. That committee was constituted on 16 April 2024. It has met exactly twice, on 21 May 2024 and 22 August 2024, and has submitted no report. We know this because the government admitted it in Parliament on 5 August 2026, in a written reply. The promise that justified judicial restraint in 2023 has produced, in over two years, two meetings and silence. Meanwhile, in July 2026 the Bombay High Court adjourned its tax case indefinitely to await Karnataka's ruling, where final arguments have been under way before Justice B.M. Shyam Prasad. Solicitor General Tushar Mehta appears personally for the Union. A state that says the matter belongs to Parliament is spending its highest law officer to make sure a High Court does not decide a gift's tax treatment.

What the gay tax costs: an economics of unrecognised care

Public finance has a name for what Section 56(2)(x) does: a violation of horizontal equity, the principle that taxpayers in materially identical situations should bear identical burdens. Two couples, identical incomes, identical years of cohabitation, identical mutual dependence. One transfer of Rs 10 lakh between them is taxed at zero; the other, at the recipient's slab, can surrender Rs 3 lakh or more to the exchequer. The differentiating variable is not ability to pay, not the substance of the transaction, but the gender composition of the couple. Tax economists tolerate many departures from neutrality when they serve administrability. This one serves nothing: the state already accepts affidavits, cohabitation evidence and nominations in other contexts, and the courts have recognised live-in relationships across a range of statutes. The exclusion is not administratively necessary. It is expressive. It prices queerness.

The behavioural distortions follow the price. Queer couples in India structure their lives around the tax: property is kept in single names, transfers are disguised as loans with paper interest, insurance nominations are quietly abandoned because the money will be rerouted to natal families anyway, estates are planned through elaborate and contestable wills where a married couple would need none. Each workaround has a deadweight cost in fees, risk and foregone joint investment, and each is a small tutorial in the state's message that your family is a legal fiction. At the macro level, M.V. Lee Badgett's World Bank study estimated in 2014 that stigma and exclusion of LGBT people could be costing India up to 1.7 per cent of GDP, then around US$31 billion a year, through lost labour, health disparities and discrimination. The gay tax is a rounding error inside that number, but it is the state's own signed contribution to it.

The deeper error is conceptual, and here feminist economics sees what the revenue lens misses. The philosopher Maurice Hamington, extending Jane Addams and Merleau-Ponty, defines care as the practices, habits and knowledge through which embodied beings sustain one another, "committed to the flourishing and growth of individuals" while acknowledging "our interconnectedness and interdependence" (Embodied Care, p. 3). Care, on this account, is not a sentiment but an economy: cooking, nursing, remembering medications, standing surety, the thousand transfers in kind and cash that keep two lives one household. Hamington notes that marriage functions in modern states as "an important category for tax and insurance purposes" (p. 127): the fiscal system is one of the principal instruments by which a society recognises, and subsidises, care.

That is exactly why the exclusion wounds. The gifts moving between Godi and Kalia, or Ashiho and Divan, are the visible, taxable tip of an ongoing care economy identical in kind to any marriage's. When the state exempts the married gift and taxes the queer one, it is not declining to subsidise queer care. It is asserting that no care is present, that what exists between these men is, fiscally speaking, the relation of strangers. Hamington's reading of Torch Song Trilogy captures the injury: when Arnold's partner is killed, his grief is illegible to his own mother because "in the eyes of society, in the eyes of the law... homosexual relationships are inferior" (p. 124). The tax notice served on a surviving partner, or on a bracelet given in love, is that illegibility with interest and penalty attached. And the 1991 mother's cry about her gold bangles shows how well ordinary Indians have always understood the stakes: recognition of a relationship is recognition of a place in the circuits of property. Her bangles and Godi's bracelet are the same object, thirty-five years apart. The only thing that changed is which family the law permits the gold to travel through.

Care ethics also explains why the petitioners' minimalism deserves to be taken seriously rather than treated as a wedge. They ask the state to track the practice of care where it actually occurs, instead of tracking a licence the state itself refuses to issue. ABVA's Demand 16 asked for the same in 1991: recognise "friendship agreements" as "a valid way of organizing family life". A tax code built on that principle, recognising registered mutual dependence whatever its gender arrangement, would be better economics as well as better ethics: neutral between household forms, aligned with actual dependency, and cheaper than the current regime of avoidance and litigation.

The ledger and the closet

Jane Addams wrote that "the good we secure for ourselves is precarious and uncertain, is floating in mid-air, until it is secured for all of us and incorporated into our common life" (quoted in Hamington, p. 108). Decriminalisation was such a good, secured in 2018 after a campaign that ran from ABVA's charter through Humjinsi's legal cartography to the constitutional victories of NALSA and Navtej. But it floats in mid-air. A citizen can now love without committing a crime, and be taxed for it as if love were income.

That is the precise measure of where the Indian sexual state stands in 2026. It no longer sends constables after queer couples; it sends assessment orders. It no longer demands bribes at the park gate; it collects at the slab rate, with the full majesty of the Finance Act. The move from policing love to taxing it is, in one sense, progress: taxation is at least contestable in open court, as Godi, Kalia, Ashiho and Divan are demonstrating. But it should also be recognised for what it is: the state's oldest project of defining legitimate intimacy, migrated into its most durable code. Section 377 survived 157 years. Definitions of "relative" in a tax statute can be quieter and longer-lived still, as the fresh ink on Section 92 of the 2025 Act shows.

The remedy, as Desai saw in 2002, is definitional. Nothing in the concept of a "spouse", a "relative" or a "family" requires heterosexuality; the Income-tax Act does not even bother to define the first of these. A High Court reading the word in the light of Articles 14, 15 and 21, a CBDT circular, a one-line amendment in the next Finance Act: any of these would end the gay tax without touching the marriage question the government insists is Parliament's alone. The question the tax cases put to the Indian state is therefore beautifully narrow. Not: must you celebrate queer love? Only: when two citizens have built the daily, embodied, material economy of care that your own statutes everywhere else call a family, will you keep taxing it as a transaction between strangers? On the answer rests more than Rs 1,15,500 and a gold bracelet. On it rests whether the sexual state can finally be persuaded to close its ledger on queer love, having long ago been made to holster its truncheon.

Sources and further reading

Primary texts

1. AIDS Bhedbhav Virodhi Andolan, Less Than Gay: A Citizens' Report on the Status of Homosexuality in India (New Delhi, 1991), esp. pp. 4-5, 12, 68-69.

2. Bina Fernandez (ed.), Humjinsi: A Resource Book on Lesbian, Gay and Bisexual Rights in India (India Centre for Human Rights and Law, 2nd edn, 2002), esp. Mihir Desai, "Civil Laws Affecting Gay Men and Lesbians", pp. 93-99.

3. Arvind Narrain and Gautam Bhan, "Introduction", in Because I Have a Voice: Queer Politics in India (Yoda Press, 2005), pp. 1-15.

4. Pawan Dhall, "How Campaigning Has Contributed to the Decriminalization of Homosexuality in India" (SOGI Campaigns, 2018).

5. Maurice Hamington, Embodied Care: Jane Addams, Maurice Merleau-Ponty, and Feminist Ethics (University of Illinois Press, 2004), esp. pp. 1-7, 105-108, 121-127.

6. Jyoti Puri, Sexual States: Governance and the Struggle over the Antisodomy Law in India (Duke University Press, 2016).

   
   

The cases and the law

7. Washington Blade, "Same-sex couples challenge India income tax law" (11 Aug 2026): https://www.washingtonblade.com/2026/08/11/same-sex-couples-challenges-india-income-tax-law/

8. LiveLaw, "Same-Sex Couples Can't Claim 'Spouse' Benefits Under Income Tax Act Without Legal Recognition Of Marriage: IT Dept Tells Bombay High Court": https://www.livelaw.in/amp/high-court/bombay-high-court/same-sex-couple-spouse-income-tax-exemption-marriage-recognition-540448

9. LiveLaw, "Tax Exemption Plea By Same Sex Couple: Bombay High Court Adjourns Hearing Sine Die Till Karnataka High Court Decides Identical Matter" (July 2026): https://www.livelaw.in/amp/high-court/bombay-high-court/same-sex-couple-tax-exemption-section-562x-543653

10. Outlook Money, "Gold Bracelet Gift Puts Same-Sex Couple's Tax Rights Before Karnataka High Court": https://www.outlookmoney.com/tax/gold-bracelet-gift-puts-same-sex-couples-tax-rights-before-karnataka-high-court

11. ThePrint, "Why govt is opposing a same-sex couple's plea for spouse tax benefits in Bombay High Court": https://theprint.in/judiciary/why-govt-is-opposing-a-same-sex-couples-plea-for-spouse-tax-benefits-in-bombay-high-court/2983145/

12. Taxscan, "Gift Tax under the New Income-tax Act, 2025" (Section 92): https://www.taxscan.in/top-stories/gift-tax-under-the-new-incometax-act-2025-taxfree-gifts-and-relatives-explained-1447754

13. The Tribune, "High-powered panel on LGBTQIA+ rights met only twice since formation, says Centre" (Aug 2026): https://www.tribuneindia.com/news/india/high-powered-panel-on-lgbtqia-rights-met-only-twice-since-formation-says-centre/

    
    

Economics

14. M.V. Lee Badgett, The Economic Cost of Stigma and the Exclusion of LGBT People: A Case Study of India (World Bank, 2014): https://documents1.worldbank.org/curated/en/527261468035379692/pdf/940400WP0Box380usion0of0LGBT0People.pdf