In the Pre-Budget Memorandum 2025, the Institute of Chartered Accountants of India (ICAI) has suggested introducing a provision allowing joint income tax return filing for married couples. This proposal seeks to address the increasing economic pressures families face.

Currently, individuals can either opt for the default tax regime under Section 115BAC or choose the normal provisions for taxation. In addition, the basic exemption limit under the default scheme is Rs 2.5 lakh for an individual taxpayer, and under the new / default regime, this can go up to Rs 3 lakh. Married couples, if both of them are earning members of the family, can benefit from the exemption limit for each member separately.

However, a significant proportion of families in India are supported by a single earning member, making the current exemption limits inadequate when considering the rising cost of living. Even for a family of four (husband, wife, and two children), the existing tax exemptions remain low, often prompting tax avoidance mechanisms through income splitting among family members.

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In this regard, the ICAI has proposed an innovative solution by introducing a joint taxation scheme for married couples.

As per this proposal, married couples could choose to file a joint income tax return, and the exemption limit would be doubled to Rs 6 lakh per family. The proposal also suggests broadening the income tax slabs to accommodate this increase in the exemption limit.

The suggested tax slabs under the joint taxation scheme would be:

Total Taxable Income (Amt in Rs) and Tax Rate (%)

Up to 6,00,000 – Nil

6,00,001 to 14,00,000 – 5%

14,00,001 to 20,00,000 – 10%

20,00,001 to 24,00,000 – 15%

24,00,001 to 30,00,000 – 20%

Above 30,00,000 – 30%

Additionally, the threshold for the surcharge would be increased, with specific rates applied to income beyond Rs 1 crore, as follows:

· Rs 1 crore to Rs. 2 crore – 10% surcharge

· Rs 2 crore to Rs 4 crore – 15% surcharge

· Above Rs 4 crore – 25% surcharge

For salaried individuals, the standard deduction under Section 16(ia) should be separately available for both the husband and wife. Moreover, the proposal suggests proportionally increasing the adjusted total income limit for the non-applicability of Alternate Minimum Tax (AMT) under Section 115JC, which currently stands at Rs 20 lakh, for couples opting out of the default tax regime.

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Impact and consideration for Budget 2025:

“Introducing a joint taxation scheme could have significant benefits, particularly for households with a single primary earner,” says CA (Dr.) Suresh Surana, a tax expert. “It would better reflect the economic realities of such families by providing a higher exemption limit and potentially easing the tax burden. Additionally, it could encourage greater compliance and foster more equitable tax practices for married couples, while aligning tax planning mechanisms with modern family structures.”

According to Surana, “The concept of joint taxation for married couples is not new and already exists in many developed countries, setting a precedent for India to review and consider if fiscally feasible.” He adds, “In the United States, married couples have the option to file jointly, with benefits including higher exemption limits and broader tax brackets. For instance, in the US, joint filing can significantly reduce the tax burden for families by allowing higher deductions and more favourable tax rates than if each spouse filed separately. Similarly, countries like the United Kingdom also allow joint income tax filing for married couples, acknowledging the shared financial responsibilities of households.”

Surana highlights, “By introducing a similar system, India would align itself with global trends of supporting families through more flexible tax structures. Such a system would not only ease the financial burden on single-income households but also increase compliance and transparency in personal tax filings.”

However, Surana notes, “This proposal would require substantial changes to the current income tax framework, including updates to how deductions, exemptions, and surcharges are applied for married couples.” As Budget 2025 approaches, he emphasises that “it remains to be seen whether this recommendation will be accepted and incorporated into the tax reforms, as it would mark a significant shift in the way the government approaches family-based taxation.”