Ahead of the Union Budget 2025, the Institute of Chartered Accountants of India (ICAI) has proposed a joint taxation system for married couples, allowing them to file taxes as a single unit. This proposal aims to benefit families, particularly those with a single income, by increasing the basic exemption limit from ₹3 lakh to ₹6 lakh and revising tax slabs. The initiative is gaining attention as Finance Minister Nirmala Sitharaman prepares to present the budget on February 1, 2025.
Proposed Changes to Taxation
The ICAI’s proposal suggests that married couples be treated as a single taxable entity, similar to taxation systems in countries like the United States and the United Kingdom. Under this proposed system, couples would have the option to combine their incomes when filing taxes, which could significantly reduce their overall tax liabilities. Specifically, the new tax slabs for joint filers would include no tax for incomes up to ₹6 lakh, a 5% tax rate for incomes between ₹6 lakh and ₹14 lakh, and higher rates for increased income brackets.
Chartered Accountant Chirag Chauhan emphasised that this change would effectively double the basic exemption limit for families, making it particularly advantageous for those with one primary earner. He stated, “This proposal not only lightens the financial burden on families but also encourages compliance by simplifying the tax process.”
Context and Rationale
Currently, married couples in India are required to file taxes individually, which can lead to higher tax burdens for families where one partner earns significantly more than the other. The ICAI’s recommendation comes in response to growing calls for a fairer tax system that acknowledges the financial dynamics of modern households. By allowing joint filing, the proposal aims to alleviate financial pressures on families amid rising living costs and promote better tax compliance.
Additionally, the suggestion includes raising the surcharge threshold from ₹50 lakh to ₹1 crore, with adjusted rates for higher incomes. This change could provide further relief to high-earning families who currently face steep surcharges. The proposal aligns with global trends where joint taxation has been implemented in various forms to support family units. Countries with similar systems often report increased satisfaction among taxpayers and improved financial stability for households. The ICAI believes that adopting such a system could lead to similar positive outcomes in India.
The Logical Indian’s Perspective
The Logical Indian supports this initiative as a progressive step towards enhancing financial equity for families in India. By adopting a joint taxation system, we can foster an environment of empathy and understanding towards diverse household structures and their financial challenges. This proposal not only offers potential relief but also encourages a dialogue about equitable taxation practices in our society. It reflects a growing recognition that modern families come in various forms and need tax structures that accommodate their unique circumstances.
As we approach the budget presentation, it is essential for stakeholders—including policymakers, taxpayers, and civil society—to engage in meaningful discussions about this proposal’s implications. How do you think this change will impact families across India? Share your thoughts and join the conversation!
