Budget 2025 expectations: Allow joint income-tax return filing by married couples, says ICAI: Budget 2025 may allow married couples to jointly file their income tax returns (ITRs) under the new tax regime, the Institute of Chartered Accountants of India (ICAI) has said in a pre-budget memorandum submitted to the government.
ICAI believes the provision of a joint taxation scheme will help families with single-earning members. It will also prevent tax avoidance by families.
It is suggested to introduce an option for joint taxation of married couples by filing a joint return of income. Individuals may be given an option to pay tax under the Joint Taxation Scheme,” the ICAI said.
They can choose to pay tax individually under the present scheme of taxation or opt for joint taxation of self and spouse,” it added.
What’s happening now
The new tax regime is currently the default tax regime for ITR filing. However, taxpayers can also opt for the old tax regime. Both these regimes provide different tax slabs, where rates increase progressively as the income rises.
The basic exemption limits under the new and old regimes are ₹3 lakh/year, and ₹2.5 lakh/year respectively. In other words, taxpayers are not required to pay any tax on incomes up to ₹3 lakh/year under the new regime and ₹2.5 lakh under the old regime.
The basic exemption limits under both tax regimes apply to each family member individually. For example, in a family of four comprising a husband, wife, and two children, each member can avail of the basic exemption limit of ₹3 lakh under the new regime or ₹2.5 lakh under the old regime.
ICAI believes that the current basic exemption limit is not adequate given the prevailing cost of living. As a consequence, it encourages the adoption of ways and means to transfer income into the hands of other family members to avoid taxes.
Joint tax rates recommended by ICAI
ICAI has recommended that the basic exemption limit under the new tax regime be doubled for joint taxation of married couples. Further, it has suggested that tax slabs also be broadened proportionately in the upcoming budget.
Doubling the exemption limit under the Joint Taxation Scheme would better align with the economic realities of such households,” it said.
The tax rates recommended by ICAI for joint taxation are as follows:
| Total income | Tax rate |
|---|---|
| Upto ₹6 lakh | Nil |
| ₹6 lakh-₹14 lakh | 5% |
| ₹14 lakh-₹20 lakh | 10% |
| ₹20 lakh-₹24 lakh | 15% |
| ₹24 lakh-₹30 lakh | 20% |
| Above ₹30 lakh | 30% |
Additionally, the ICAI has recommended raising the surcharge threshold limit from ₹50 lakh to ₹1 crore. It has also suggested that the standard deduction should be available separately for both the husband and wife if they are salaried.
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