Proposed Joint Tax Filing in Budget 2025: A Boon for Married Couples?

Proposed Joint Tax Filing in Budget 2025: A Boon for Married Couples?ICAI’s proposal to introduce joint tax filing aims to reduce tax burdens for families while simplifying the filing process.

January 25, 2025: In a move that could revolutionise tax filing in India, the Institute of Chartered Accountants of India (ICAI) has proposed the introduction of joint taxation for married couples ahead of the Union Budget 2025. If implemented, the system would allow couples to file their taxes as a single unit, combining their incomes for a streamlined process. This approach is already in use in countries like the US and UK.

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Chartered Accountant Chirag Chauhan highlighted the proposal on X (formerly Twitter): “ICAI suggests allowing joint income tax return filing for married couples. An individual income of Rs 7 lakh is exempt from tax; if married, the exempt limit for the family would be Rs 14 lakh.”

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What the Proposal Entails

Under the proposed system, couples can choose to file taxes jointly or individually. Joint filing could particularly benefit families with a single income earner and reduce instances of tax avoidance. The suggested tax slabs for joint filings are:

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• Up to Rs 6 lakh: No tax
• Rs 6-14 lakh: 5%
• Rs 14-20 lakh: 10%
• Rs 20-24 lakh: 15%
• Rs 24-30 lakh: 20%
• Above Rs 30 lakh: 30%

The basic exemption limit under this system would increase to Rs 6 lakh from Rs 3 lakh. Additionally, the ICAI recommends raising the surcharge threshold from Rs 50 lakh to Rs 1 crore, with surcharges applied as follows:

• Rs 1-2 crore: 10%
• Rs 2-4 crore: 15%
• Above Rs 4 crore: 25%

Advantages for Married Couples

Currently, married couples in India file taxes separately, which can lead to higher tax liabilities, especially when one spouse is the primary earner. Joint filing could provide significant relief by lowering the tax burden, offering extra deductions, and simplifying the process. For salaried couples, both partners could also benefit from standard deductions.

In countries like the US, joint filing reduces the tax burden through combined income thresholds and additional credits. Experts believe this could also be a game-changer for Indian families.

Challenges to Implementation

While the proposal is promising, experts caution against expecting immediate implementation. Tax partner SR Patnaik of Cyril Amarchand Mangaldas stated, “Introducing joint taxation will require creating a new regime with different slabs, rates, deductions, and surcharges. It’s unlikely to be part of the upcoming budget.”

CA Suresh Surana explained that the proposal targets single-income families and could help ease their financial burden. However, implementing such a system will require extensive planning and legislative changes.

A Step Toward Tax Reforms

ICAI’s proposal comes amid growing concerns over the insufficiency of the current basic exemption limit, especially given rising living costs. By addressing these gaps, joint filing could make tax filing more equitable for families.

Whether or not this proposal makes it into Budget 2025, it has sparked an important conversation about the need for tax reforms in India.

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Tags: ICAI, joint taxation, Budget 2025, married couples, income tax, tax reforms, tax slabs, financial planning, tax policy, India tax system