With the pending Union Budget of 2025, the Institute of Chartered Accountants of India (ICAI) has come up with a substantial proposal for implementing joint taxation for married couples. This system, already practiced in countries like the US and the UK, would allow married couples to file taxes as a single taxable unit, combining their incomes. The shift is to cut out tax liabilities to parents, especially parents with one wage earner.
If introduced, joint taxation will have the practical effect of doubling the threshold of the basic exemption. For example, although an individual currently benefits from an income tax exemption for an income of ₹7 lakh under the new regime, the recommendation proposes providing this relief for ₹14 lakh to married couples filing jointly. This could lead to considerable financial relief for families.
Key Features of the ICAI Proposal for Married Couples Under Union Budget 2025
Based on the proposed system, couples could select the option to file taxes separately or as a group. The suggested tax slabs for joint filers are:
- Up to ₹6 lakh: No tax
- ₹6-14 lakh: 5%
- ₹14-20 lakh: 10%
- ₹20-24 lakh: 15%
- ₹24-30 lakh: 20%
- Above ₹30 lakh: 30%
Further, the percentage is also proposed to be raised from ₹50 lakh to ₹1 crore in the amount of the surcharge and to edited surcharge rates as follows:
- ₹1-2 crore: 10%
- ₹2-4 crore: 15%
- Above ₹4 crore: 25%
S family beneficially joint filing may also be potentially able to access a higher basic exemption limit (Indian rupees 6 lahks as against the current 3 lahks) and a deduction such as the standard deduction for both partners.
Current System and Challenges
In India, married couples file taxes at present on the basis of separate tax liabilities, which can result in higher tax liability, especially for single-income families. Despite the fact that this system is an advantage for dual-income families because of the capability to make separate deductions, single-income families do so to a weaker degree. The ICAI points out that the statutory minimum exemption limit, as it stands, no longer reflects increases in the cost of living.
Will It Be Implemented?
Tax professionals are still quite doubtful of the rapid uptake of this proposal. S.R. Patnaik, Taxing Associate at Cyril Amarchand Mangaldas, thinks that the creation of a unified taxation system would necessitate a complete rethinking of slabs, rates, and exemptions, and therefore should not be included in the Budget 2025.
If implemented, shared taxation may contribute importantly to financial strain reduction for families, as an outcome of a fairly equitable system in line with international standards.
Also, see: Union Budget 2025: Will Taxpayers Finally See Income Tax Relief?