Budget 2025: ICAI Proposes Joint Taxation For Married Couples. Here's How It Will Benefit Spouses

Ahead of the Union Budget 2025, the Institute of Chartered Accountants of India (ICAI) has proposed the introduction of joint taxation for married couples.

Under this system, a married couple would be treated as a single taxable entity, allowing them to combine their incomes when filing tax returns, similar to the systems in place in countries such as the US and the UK.

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"ICAI suggests allowing joint income tax return filing for married couples," Chartered Accountant Chirag Chauhan wrote on X (formerly Twitter).

"Ideally, an individual income of ₹7 lakh is exempt from tax; if married, the exempt limit for the family would be ₹14 lakh."

Details of the proposal

The ICAI suggests that married couples should be able to choose between filing taxes individually or jointly under the new system. This could particularly benefit families with one primary income earner and help prevent tax avoidance. The proposed tax slabs for couples filing jointly are:

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

Under the joint filing system, the basic exemption limit would double to ₹6 lakh from the current ₹3 lakh.

The ICAI also recommends raising the surcharge threshold from ₹50 lakh to ₹1 crore, with the surcharge applied as follows:

- ₹1 crore to ₹2 crore: 10% surcharge
- ₹2 crore to ₹4 crore: 15% surcharge
- Above ₹4 crore: 25% surcharge

Both partners in a salaried couple would also benefit from the standard deduction.

Current tax system for married couples

Currently, married couples in India file taxes separately, which can lead to higher taxes when one spouse earns significantly more than the other. The system works better for families where both partners earn, as each can claim individual deductions.

However, single-income families miss out on these benefits. In countries like the USA, joint filing reduces the overall tax burden by combining incomes and offering additional deductions and credits.

The ICAI has also raised concerns that the current basic exemption limit is insufficient given the rising cost of living. It has been suggested that families should look into shifting income to other members to reduce their tax obligations.

How the joint taxation system could work

By opting for joint filing, families could substantially lower their tax liability through additional deductions and more favourable tax rates compared to filing separately. This system helps reduce the overall tax burden for families.

Expert opinion

Tax experts believe it is unlikely that this will be implemented 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 the introduction of a completely new regime with different slabs and rates, deductions, exemptions, surcharges, etc. Hence, it is uncertain if such a scheme will be introduced in the upcoming budget," said SR Patnaik, partner and head of taxation at Cyril Amarchand Mangaldas, a law firm, in an interview with Upstox.

CA Suresh Surana explained to Business Today that the ICAI's proposal aims to assist families, particularly when one spouse is the primary earner.

He clarified that people could choose between the default tax system and the regular tax rules.

The basic exemption limit for individuals is ₹2.5 lakh under the default system, but it could rise to ₹3 lakh under the joint taxation option.