The Institute of Chartered Accountants of India (ICAI) has proposed a joint taxation scheme for married couples in its Pre-Budget Memorandum 2025, aiming to address the increasing economic challenges families face. The proposal, if accepted, would allow married couples to file a single income tax return (ITR) and combine their income tax liabilities, offering financial relief, particularly for single-income households.

Currently, individuals file separate tax returns under either the normal tax provisions or the new tax regime. Each individual has a basic exemption limit of ₹2.5 lakh (or ₹3 lakh under the new regime). If both spouses are earning, they can both claim the exemption individually, potentially increasing the household's tax exemptions. However, many families, especially those with a single earner, find the current exemption limits inadequate due to the rising cost of living.

The ICAI's proposal aims to ease the tax burden on married couples by allowing them to file a single ITR. Key features of the proposal include:

The joint taxation system could have several benefits:

• Higher Exemption Limit: For families with a single primary earner, doubling the exemption limit would reduce the overall tax burden.
• Tax Relief for Families: It would better reflect the economic realities of single-income households and address growing living costs.
• Encouraging Compliance: This proposal could simplify tax filing and foster greater compliance among married couples.
• Alignment with Global Practices: Countries like the US and the UK already offer joint tax filing for married couples, recognizing the shared financial responsibilities within families.

• United States: Joint filing provides higher exemption limits and more favorable tax rates for married couples, making it beneficial for families, especially those with a single income.
• United Kingdom: Similar to the US, the UK allows married couples to file jointly, acknowledging their shared financial obligations.

While the joint taxation proposal could ease financial burdens, it would require substantial changes to India’s current tax system, including adjustments in deductions, exemptions, and surcharges. This could involve complex revisions to how taxes are calculated for married couples, impacting the overall tax framework.

The ICAI's proposal for joint tax filing could be a game-changer for married couples, especially those with a single primary earner. It would provide financial relief, encourage tax compliance, and align India with global tax practices. As Budget 2025 approaches, it remains to be seen whether this proposal will be implemented, marking a significant shift in how India views family-based taxation.