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ICAI recommends enabling joint tax return declare couples. Ideally, a private revenue of Rs 7 lakh is excluded from tax obligation; if wed, the excluded restriction for the household would be Rs 14 lakh.
Under this suggested system, couples would certainly have the alternative to submit tax obligations collectively or independently.
Ahead of the Union Budget 2025, the Institute of Chartered Accountants of India (ICAI) has actually suggested the intro of a joint taxes system for couples. This would certainly enable pairs to submit tax obligations as a solitary taxed device, allowing them to incorporate their earnings, comparable to the systems currently in position in nations like the United States and the UK.
” ICAI recommends enabling joint tax return declare couples. Ideally, a private revenue of Rs 7 lakh is excluded from tax obligation; if wed, the excluded restriction for the household would be Rs 14 lakh,” Chartered Accountant Chirag Chauhan said in a post on X.
Under this proposed system, married couples would have the option to file taxes jointly or individually. The new approach is designed to benefit families where one partner is the primary earner, helping reduce tax burdens and preventing tax avoidance.
The proposed tax slabs for couples filing jointly are as follows:
- Up to Rs 6 lakh: No tax
- Rs 6-14 lakh: 5% tax
- Rs 14-20 lakh: 10% tax
- Rs 20-24 lakh: 15% tax
- Rs 24-30 lakh: 20% tax
- Above Rs 30 lakh: 30% tax
One of the key features of this joint filing system is that the basic exemption limit would double to Rs 6 lakh from the current Rs 3 lakh. The ICAI has also recommended raising the surcharge threshold from Rs 50 lakh to Rs 1 crore. The proposed surcharge rates are:
- Rs 1 crore to Rs 2 crore: 10% surcharge
- Rs 2 crore to Rs 4 crore: 15% surcharge
- Above Rs 4 crore: 25% surcharge
Additionally, both partners in a salaried couple would be able to benefit from the standard deduction under the joint filing system.
How the Joint Taxation System Could Work
Under the joint filing option, families would be able to lower their tax liabilities through additional deductions and more favourable tax rates, compared to filing individually. This system would effectively reduce the overall tax burden for families, particularly those with a single primary earner.
Current Tax System for Married Couples
Currently, married couples in India file taxes separately, which can lead to a higher tax burden if one spouse earns significantly more than the other. This system generally benefits dual-income families, as each spouse can claim individual deductions. However, single-income households miss out on these benefits.
In countries like the USA, the joint filing system helps lower the overall tax burden by combining the incomes and offering extra deductions and credits, which the ICAI’s proposal aims to replicate.
The ICAI has also pointed out that the current basic exemption limit is insufficient in light of rising living costs. They have suggested that families could explore shifting income to other members of the household to reduce tax liabilities.
What Experts Say
Despite the potential benefits, tax experts believe that the implementation of joint taxation may not happen in the upcoming budget.
“While joint taxation will be a beneficial move, the government may take time to introduce such a scheme, as it would require a complete overhaul of the existing regime with different slabs, rates, deductions, exemptions, surcharges, etc. Hence, it is uncertain if such a scheme will be introduced in the upcoming budget,” claimed SR Patnaik, Partner and Head of Taxation at Cyril Amarchand Mangaldas, a law practice.
CA Suresh Surana has actually claimed ICAI’s proposition is made to sustain households, specifically those where one partner is the main income earner. He included that individuals would certainly still have the alternative to select in between the default tax obligation system and the joint declaring plan. Under the existing system, the fundamental exception restriction for people is Rs 2.5 lakh, yet it might boost to Rs 3 lakh if the proposition is approved.
