The Union Budget has everyone hooked, and what most people want to know is whether there will be more tax cuts like last time, which gave a huge leg-up and bonanza to taxpayers.
While there is no such indication,
an idea doing the rounds is that of joint taxation for married couples, which policymakers believe could be a game changer for households. If accepted and announced by the Finance Minister, it would benefit millions of married couples and mark a major shift in how personal taxation operates.
The basic premise is that a household is treated as one unit. Currently, even when both spouses are working or have independent sources of income, taxes are filed individually. This could change if the option of couple taxation is introduced, as it would recognise shared expenses and assets.
Here is what couple tax means. Under joint filing, a single ITR with combined income would be assessed against a restructured tax slab. For instance, there could be no tax up to Rs 6 lakh and a 5 per cent tax on income between Rs 6 lakh and Rs 14 lakh.
According to government sources, this system would simplify tax filing and ease compliance. It would reduce paperwork and make it easier for couples to manage their tax matters. It could also benefit households with a single earning member, as the exemption threshold and effective tax liability may become more favourable.
The concept could benefit single-earner couples as well as double-income families, who may gain from higher basic exemptions and standard deductions. It could also allow deductions for home loan and education loan interest. At present, a surcharge is levied on income above Rs 50 lakh; under couple taxation, this threshold could be raised to Rs 75 lakh.
However, the option would be voluntary and primarily beneficial for middle-income earners. For those in higher income brackets, it may not be as advantageous, as combined income could push them into higher tax slabs.
If accepted and announced, it would signal another major overhaul and modernisation of India’s tax structure. Currently, there is no distinction between married and unmarried individuals for tax purposes. Couples have separate PANs, and if one spouse has no income, their exemption goes unused.
The proposal has been suggested by the Institute of Chartered Accountants to the Finance Ministry and is already popular in several countries, including Germany and the United States.
