ICAI Proposes Reform for Joint Tax Returns
The Institute of Chartered Accountants of India (ICAI) has proposed a significant reform that could allow married couples to file joint tax returns. This initiative aims to provide relief for families that primarily rely on a single source of income.
Potential Benefits of Joint Filing
The current income-tax framework in India is structured around individual taxation, where spouses file separately despite often sharing finances. Tax experts argue that this approach does not reflect the realities of modern households. Experts believe that joint filing could lead to lower tax liabilities for single-income families by offering more favorable deductions and a more equitable tax structure.
Countries like the United States and Germany have already adopted similar measures, allowing couples to be assessed as a unified financial entity. The proposed reform by ICAI could facilitate better tax planning, especially for families where one spouse earns substantially more than the other.
Expected Details in Upcoming Budget
The Finance Minister is anticipated to address the issue of joint taxation in the Union Budget for 2026–27, which will be presented on February 1. Under the new proposal, couples with valid Permanent Account Numbers (PANs) would be able to opt for joint filing while retaining the choice of remaining under the current individual taxation system.
ICAI suggests that the basic exemption limit for joint filers be doubled, allowing income up to Rs 8 lakh to remain tax-free, with progressively higher slabs for combined household income. This reform could unlock benefits for non-working spouses whose tax exemptions currently go unused.
However, it’s essential to note that joint filing may not always be beneficial, particularly for couples with similar high incomes, as it might place them in higher tax brackets. The idea is seen as a potential step towards more cohesive financial planning for families and easing tax complexities for retired couples.
