Budget 2025: Joint taxation for married couples could be introduced
What's the story
The Union Budget 2025 could bring a major overhaul to India's taxation system with the introduction of joint taxation for married couples. The proposal has been suggested by the Institute of Chartered Accountants of India (ICAI). Under the new system, couples would be able to file their income tax returns (ITRs) jointly under the New Tax Regime. The move would provide relief to families with a single source of income and promote better tax compliance.
Global adoption
Joint taxation: A global trend in tax planning
Though the idea of joint taxation isn't new (it's already common in developed nations like the United States and the United Kingdom), the proposed system would ease the financial burden and simplify tax planning for Indian families. ICAI's recommendations include a revised set of tax slabs for joint filing, which could potentially double the basic exemption limit for couples as opposed to individual taxpayers under the current New Tax Regime.
Tax structure
Proposed tax slabs and benefits under joint taxation
The proposed tax slabs for joint filing include: no tax on income up to ₹6 lakh; 5% for ₹6-14 lakh; 10% for ₹14-20 lakh; 15% for ₹20-24 lakh, etc. This system would also let salaried couples avail individual standard deductions while proposing to increase the surcharge threshold from ₹50 lakh to ₹1 crore with progressive surcharge rates on higher income brackets.
Financial relief
Joint taxation: A relief for single-income families
The proposed joint taxation system is especially advantageous for families with one earning member. It provides higher exemption limits and lower effective tax rates, in line with global trends that recognize shared household responsibilities. The move could reduce tax liability for middle-income families and deter tax evasion practices such as income splitting by shifting tax liabilities to a common framework.
Tax reform
ICAI's proposal: A potential game-changer in India's tax landscape
If implemented, the joint taxation proposal could revolutionize India's tax landscape, bringing it in line with progressive global practices. The system aims to ease financial burdens, improve compliance, and promote fairness in personal tax filings. With Budget 2025 to be announced on February 1, all eyes are on the government to see if this transformative reform will be realized, potentially changing how Indian families manage their finances.