Introduction to Joint Income Tax Returns
In India, married couples currently have to file their income tax returns separately, which can sometimes create a heavy tax burden for families. However, there is growing support for a shift towards a joint income tax return system, similar to what is practiced in countries like the United States and the United Kingdom. This proposal has been put forth by the Institute of Chartered Accountants of India (ICAI), urging the Central Government to consider it in the upcoming budget. The idea is to simplify the tax process for families and provide them with more financial relief.
Benefits for Families
One of the primary advantages of adopting a joint income tax filing system is that it can benefit families where both partners are earning. In cases where one spouse earns significantly more than the other, filing separately allows for specific tax deductions. However, families with a single income often miss out on these benefits. With a joint filing system, couples can combine their incomes, potentially reducing their overall tax liability. This approach could provide much-needed relief to single-income families, allowing them to enjoy similar benefits.
Reducing the Tax Burden
The joint income tax filing system has been shown to alleviate tax burdens in other countries. In the US, for example, combining incomes allows couples to take advantage of additional deductions and credits. The ICAI argues that by implementing a similar system in India, families could significantly lower their tax payments. The proposal suggests that married couples would be treated as a single taxable unit, allowing them to adjust their combined income when filing. This could lead to a more favorable tax rate and reduced liability for many families.
Proposed Tax Slabs and Exemption Limits
According to the proposed system, the exemption limit for married couples filing jointly could be set at Rs 14 lakh, effectively doubling the current personal income tax exemption limit of Rs 7 lakh. The suggested tax slabs would also provide a more structured approach to taxation. For instance, there would be no tax on incomes up to Rs 6 lakh, and a 5% tax would apply to incomes between Rs 6 and Rs 14 lakh. This new structure aims to offer flexibility for married couples, allowing them to choose between individual and joint filing options. It is also believed that this system could help in curbing tax evasion, ultimately benefiting the economy as a whole.
