The Institute of Chartered Accountants of India (ICAI) has proposed a change to the country’s tax framework by introducing a joint taxation system for married couples.  

This recommendation comes after a broader review of the Income-tax Act, 1961, ahead of the Union Budget 2025.  

The new system would allow couples to file taxes as a single taxable unit or individually, potentially doubling the basic exemption limit for joint filers. 

In January 2025, ICAI submitted suggestions for the review of the Income-tax Act, which is currently being examined by a committee at the Central Board of Direct Taxes (CBDT) level.  

The latest proposed joint taxation system aims to alleviate the tax burden on families with a single primary earner and to prevent tax avoidance. 

One of the changes under this system would be an increase in the basic exemption limit from Rs300,000 ($3,600) to Rs600,000 ($7200) for couples filing jointly.  

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Additionally, ICAI has recommended that the surcharge threshold be raised from Rs5m to Rs10m, with varying surcharge rates based on income brackets.  

This will allow salaried couples to also be able to individually claim the standard deduction under the joint filing system. 

Currently, in India, married couples are required to file taxes separately, which can result in higher tax bills for households with only one income.  

ICAI argues that the current basic exemption limit does not reflect the rising cost of living in India and that reforms are necessary to ease the financial pressure on families. 

This announcement follows ICAI’s decision to postpone the enforcement of Phases III and IV of its peer review mandate.  

The new deadlines have been extended to 1 July 2025 for Phase III and 1 January 2026 for Phase IV, as decided during the 407th meeting of the ICAI Council in January 2022, with the intention to expand the scope of the peer review process.