Taking pride in one’s identity is crucial in living a fulfiling life, but sometimes it means going against old norms. Globally, lakhs of individuals struggle to find peace between their identity and societal acceptance. Nevertheless, they continue advocating their rights. It includes eliminating discriminating laws that prevent LGBTQIA+ individuals from achieving financial freedom.
In 2012, data received by the Supreme Court suggested that about 2.5 lakh Indians identified themselves as members of the LGBTQIA+ community. However, these figures may not fully reflect the actual numbers. The paranoia of stigmas and prejudice prevent many members from registering as part of the community in government institutions.
Financial Struggles of the LGBTQIA+ Community
Fast forward to 2022, India is still trying to catch up to become more LGBTQIA+ inclusive. Despite the historic takedown of Section 377 by the Supreme Court in 2018, many financial institutions are yet to make a move. The lack of progress in the fiscal sphere has adversely impacted the lives of thousands of queer Indians.
Individuals from the LGBTQIA+ community are unable to exercise their financial rights to their full extent. Moreover, many queer employees face harassment and discrimination at work. This hinders their ability to productively function at work and earn an income.
To understand their financial hurdles better, let’s break down some of the problems commonly experienced by them.
1. Health Insurance
Purchasing health insurance is a great way of ensuring financial backup during medical emergencies. However, LGBTQIA+ couples struggle to partake of benefits under family floater policies. Since their partnerships or marriages are not recognised by the law, they can’t purchase these policies together.
2. Life Insurance
In case of death, life insurance will protect the surviving dependants of the policyholder by providing them with a sum insured. Since LGBTQIA+ partners are not legally considered “family”, they cannot register each other as dependants.
3. Gift Tax
When a sudden financial need arises, it’s normal for certain family members to offer some monetary support to each other. If received from family members like parents or spouses, these gifts will be exempt from income tax. Queer couples don’t fall in this category and are subject to tax on gifts above the limit of ₹50,000 in value p.a.
In India, inheritances are disbursed either through Wills or intestate succession. While queer partners can draw Wills for each other, these papers could be contested by family members in a court of law. Since their relationship is not legally recognised, the court may reject the validity of these Wills. Whereas intestate succession in India is governed by an individual’s personal law. It includes the following,
- Hindu Succession Act, 1956
- Indian Succession Act, 1925 – for Christians
- Muslim Personal Law, 1937
Although, these personal laws don’t recognise LGBTQIA+ partners as qualifiable to inherit any possessions of their deceased partner.
With so many restrictions holding queer individuals back, it’s crucial for them to align their finances to meet various life goals. Things may seem bleak today, but the finance industry is slowly moving towards an LGBTQIA+ inclusive future. These individuals must pre-plan for different milestones and begin saving for them early.
The Need for Financial Literacy
Awareness on the importance of financial planning and investing is low within the community. While having children through artificial mediums is possible, gay couples cannot legally adopt children in India. With life goals like marriage, child-rearing and their education absent, they seldom consider saving much of their income.
The lack of financial literacy and the availability of information has made personal finance management difficult for them. Without the support of insurance coverage, queer partners need to set aside a higher amount of savings. The emergency corpus for such couples would be higher than those for heterosexual married couples.
While the RBI holds no restrictions on who can open bank accounts, certain banks are reluctant to offer services to queer individuals. So, queer couples must have separate bank accounts to manage finances.
The Progress of Queer Finance
Despite these legal hurdles, the LGBTQIA+ community in India has witnessed positive developments for queer individuals in the fiscal realm. In 2021, Axis Bank became one of the first banks to announce policies for customers identifying as LGBTQIA+. It brought a wave of positive changes with the following new policies,
- Same-sex partners can open joint accounts
- Individuals can choose their title as “Mx” in forms
- Customers can nominate their same-sex partner as their nominee
To impart wisdom on personal finances for queer Indians, Humsafar Trust (Mumbai) and Bank of America Merrill Lynch 2019 held a financial literacy session for younger LGBTQIA+ members. It was called “Financial Literacy for LGBTQ Youth” and tackled various topics specific to the community.
While more tailor-made financial policies for queer individuals are still on the way, it’s best to start the journey today. Begin pursuing financial goals at an individual level and gather enough funds to afford medical care and other necessities. Align your personal finance goals by seeking expert advice on the best investment instruments and insurance products available. With the right investment strategy, you could secure your and your partner’s future and acquire substantial wealth in no time!