Joint Taxation: In the Pre-Budget Memorandum 2025, the Institute of Chartered Accountants of India (ICAI) has suggested to the Central Government that married couples should be allowed to file income tax returns jointly. The purpose of this proposal of ICAI is to reduce the increasing tax burden on families. Let us tell you that the joint taxation system is applicable in many countries including America and England.

Currently, you can either opt for the default tax regime under section 115BAC or choose the normal provision for taxation. Apart from this, the basic exemption limit under the default scheme for individual taxpayers is Rs 2.5 lakh, and under the new/default regime, it can go up to Rs 3 lakh.

The current tax exemption is not enough.

Most families in India have only one earning member, so considering the rising inflation, the current exemption limit is not enough. Even if there is a family of only four people, the current tax exemption seems less. Due to this people try to save their taxes by splitting their income in the family.

Therefore, ICAI has suggested starting a joint taxation scheme for married couples. While this will reduce the tax burden on families, it will also curb tax evasion.

According to this proposal of ICAI, married couples should be allowed to file joint income tax returns. If this happens, their tax exemption limit will double to Rs 6 lakh per family. ICAI also told what should be the income tax rates for couples.

Total taxable income and tax rates

According to ICAI, there should be no tax on income up to Rs 6 lakh. The tax rate should be 5% on income of Rs 6-14 lakh, 10% on income of Rs 14-20 lakh, 15% on income of Rs 20-24 lakh, 20% on income of Rs 24-30 lakh and 30% on income of more than Rs 30 lakh. If both husband and wife are employed, then both should get the benefit of a standard deduction.

Apart from this, ICAI has also recommended increasing the surcharge limit. They have proposed that special rates should be applied on income above Rs 1 crore, which should be as follows:

On income from Rs 1 crore to Rs 2 crore - 10% surcharge
On income from Rs 2 crore to Rs 4 crore - 15% surcharge
On income above Rs 4 crore - 25% surcharge

The benefit of joint taxation

Joint taxation will especially benefit those couples, in which one's income is much higher than the other. Filing returns by combining their income will reduce their tax liability. Because the tax liability will be decided based on the average income of both.

In this way, filing returns together can reduce the tax burden on them as compared to filing separate returns. Now it remains to be seen whether this recommendation of ICAI will be accepted in Budget 2025 or not.

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