Imagine living with your dream partner, but not being able take joint home loans, name each other as beneficial nominees for life insurance policies or even inherit the wealth of your partner or parents.
These are some of the many ways in which the transgender in India faces financial discrimination. Homosexuality was de-criminalised in 2018. But the lack of a legal backing of their marriage means that mixing their finances as a couple isn’t easy or next to impossible.
As part of the ongoing pride month celebrations, we delve deeper into the financial rights of at least a 2.5 million population that identifies as lesbian, gay, bisexual, transgender, queer, intersex and asexual (LGBTQIA+) community in India.
As a transgender, one can buy an insurance policy. Due to the small population of LGBTQIA+ who have sought such covers, there is no separate bucket to charge a different premium for such individuals.
Would the premium be high if you mentioned the third gender? “The underwriting practices for such proposals vary, but they are treated as male lives,” says an appointed actuary at a leading private life insurance company. So, the premium for 30-year male and a 30-year transgender would be the same.
But if you wish to name your partner as a beneficial nominee, who has the right to the claim proceeds irrespective of claims of other legal heirs, then it would be difficult. “LGBTQIA+ couples cannot be the beneficial nominee for one another,” says Sajja Praveen Chowdary, Head, Term Insurance, PolicyBazaar.com.
In India, one is allowed to change their legal gender post a sex-reassignment surgery, but if you seek an insurance cover for such surgeries, then you need to assess the insurance terms. Transgender persons are offered group insurance benefits covering many surgeries and benefits.
“There are chances that sex change surgeries may be included under corporate plans, which are specific and customized to each organization,” says Amit Chhabra, Head, Health, and Travel Insurance, PolicyBazaar.com.
But this would not be accessible to individuals and even be dependent on the specific insurer. “Unfortunately, sex change surgeries are mostly excluded even in corporate policies,” says Dr Sudha Reddy, Head-Health and Travel at Digit Insurance.
She adds that one cannot claim expenses for maternity, infertility or surrogacy-related treatments in individual policies, irrespective of the type of couple. Select insurers, however, offer such benefits after a waiting period of 24-36 months.
Same-sex couples who adopt children can add them as policy beneficiaries under family floater health insurance policies.
One can open a bank account as a transgender and a joint account with the ‘partner’. “Banks have no restriction on who can open accounts. So long as all parties provide the required documents, banks will open joint accounts,” says Adhil Shetty, CEO, Bankbazaar.com. Card issuances too have been permitted.
Reserve Bank of India doesn’t distinguish or specify the gender for joint account holders. But Delhi-based homosexual couple Dr Kavita Arora and Dr Ankita Khanna say that they faced refusal from banks while opening a joint account. They have filed a petition in the Delhi High Court in October 2020, demanding recognition of same-sex marriages.
You may have built the house together, but you cannot sign a home loan application with your partner.
Gaurav Gupta, founder and CEO, MyLoanCare, explains, “You can borrow via joint home loans if the marriage is registered. You would have to share the standard know-your-customer (KYC) and income documents, including a marriage certificate.”
Since there is no legal recognition for same-sex marriages in India, such couples will not have the relevant documents for a joint home loan. “For joint applicants, proof of relationship is mandatory even in the case of parents, siblings and business partners. A lender's policy is neutral and non-discriminatory and non-registration of marriage is a civil law issue,” says Gupta.
But there is one role the same-sex partner can play in a loan. “It may not be possible for you to take a home loan jointly. However, you can stand guarantee to each other’s loans,” confirms Shetty.
Mutual fund investments can be made together through joint holding between two individuals who have their KYC in place. There is also an option of ‘either or survivor’ holding under mutual funds that LGBTQIA+ community can use to ensure smooth succession. Nomination rules under mutual funds say that any person including a minor, non-resident Indian or even charitable trusts can be named as a nominee.
Taxation benefits are offered for expenses made on dependents – including spouse and children. Would you be able to claim these for your ‘partner’ or an adopted child?
Dr Suresh Surana, founder of RSM India, confirms, “Tax benefits such as a child’s education allowance, children’s hostel allowance, are available for both the biological as well as adopted child.”
So, you can claim the tuition fee benefit for an adopted child. “Deduction for tuition fees is available to an individual in respect of any two children of the individual. Tax laws do not go by whether the parents are married or not,” says Homi Mistry, Partner, Deloitte Haskins & Sells.
But for leave travel allowance (LTA) and mediclaim premium, the term used is spouse, which isn’t specifically defined by the Income Tax Act. “The government has still not accorded any legal sanction to same sex marriages in India. So, it may be difficult for same sex partners to claim benefit as ‘spouse’ or ‘relative’ under the existing tax position, as it is governed by the legal position of such marriages,” Surana says.
Wills and inheritance
Though some financial services permit nomination for the “partner,” you must understand that a nominee is only the custodian of the financial assets and not the legal heir. “In case you want your assets to be passed on to your partner, you would need to specify it in a will,” says Shetty.
Even though the importance of a will has been underlined time and again, this is the only armoury in the financial closet of homosexuals.
This is because the Hindu Succession Act 1956 (Hindus, Jains, Buddhists & Sikhs), Indian Succession Act, 1925 for others (Parsis, Christians, Jews, others married under Special Marriages Act) and Muslim Personal Laws do not recognise the third gender.
“All the Succession Laws detail the distribution to males or females. This essentially means that a transgender cannot inherit anything from parents,” confirms Rajat Dutta, Founder & Initiator, Inheritance Needs Services.
While some financial institutions are sensitive and want to offer help, a grey area would exist until Courts in India permit same-sex marriages. “Much more needs to be done for the financial inclusion of LGBTQIA+ couples,” says Shetty.
On money matters, such couples would be suffering due to fewer tax benefits and lack of financial products. As Mistry rightly points out, “The queer population should first be recognised by the law in India and thereupon there could be suitable amendments to allow certain benefits,” says Mistry.