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Budget 2025: How couples will benefit from ‘joint taxation’ proposed by ICAI
In anticipation of the Union Budget 2025, the Institute of Chartered Accountants of India (ICAI) has proposed the introduction of a ‘joint taxation’ system for married couples. This initiative aims to treat married couples as a single taxable entity, allowing them to file combined income tax returns, a practice prevalent in countries like the United States and the United Kingdom.
Key Features of the Proposal:
- Combined Income Filing: Married couples would have the option to aggregate their incomes and file a single tax return, rather than separate individual returns. ndtv.com
- Enhanced Exemption Limits: The basic exemption limit is proposed to be doubled for joint filers. For instance, if the individual exemption limit is ₹7 lakh, a married couple filing jointly would enjoy an exemption of ₹14 lakh. ndtv.com
- Revised Tax Slabs: The proposal includes broader tax brackets under the Joint Taxation Scheme, potentially reducing the overall tax burden for couples. bignewsnetwork.com
Benefits for Married Couples:
- Tax Savings: By combining incomes, couples might fall into lower tax brackets, leading to significant tax savings. This is especially beneficial if one spouse has a substantially lower income or is not earning.
- Simplified Compliance: Filing a single tax return can simplify the tax compliance process, reducing paperwork and administrative efforts.
- Equitable Taxation: The system aims to provide relief to families with a single primary earner and address disparities in tax liabilities between single-income and dual-income households. theaccountant-online.com
Considerations:
- Implementation Complexity: Introducing joint taxation would require significant changes to the current tax framework, including adjustments to deductions, exemptions, and surcharges. This complexity might delay its adoption. financialexpress.com
- Optional vs. Mandatory: The proposal suggests that joint filing should be optional, allowing couples to choose between individual or joint taxation based on their financial situations.
- In anticipation of the Union Budget 2025, the Institute of Chartered Accountants of India (ICAI) has proposed the introduction of a ‘joint taxation’ system for married couples. This initiative aims to treat married couples as a single taxable entity, allowing them to file combined income tax returns, a practice prevalent in countries like the United States and the United Kingdom.
- Preventing Tax Evasion: The initiative aims to reduce tax evasion by encouraging transparent reporting of combined household incomes.
Global Perspective:
Many countries have implemented joint taxation systems, recognizing the family as a single economic unit. This approach often results in tax benefits for couples, promoting fairness and reducing the tax burden on single-income families. In anticipation of the Union Budget 2025, the Institute of Chartered.
Accountants of India (ICAI) has proposed the introduction of a ‘joint taxation’ system for married couples. This initiative aims to treat married couples as a single taxable entity, allowing them to file combined income tax returns, a practice prevalent in countries like the United States and the United Kingdom.
The ICAI’s proposal for joint taxation in the upcoming Budget 2025 represents a significant shift in India’s tax policy, aiming to provide substantial benefits to married couples. If implemented, it could lead to increased disposable incomes for families.
simplified tax processes, and a more equitable taxation system. However, the complexity of overhauling the existing tax framework means that careful consideration and phased implementation would be essential.
Tax Savings: By combining incomes, couples might fall into lower tax brackets, leading to significant tax savings. This is especially beneficial if one spouse has a substantially lower income or is not earning.
