Income Tax: Big news for taxpayers. Raghav Chadha, a member of the Rajya Sabha, spokesperson for the Aam Aadmi Party (AAP), and a chartered accountant, has suggested that married couples should file their income tax returns jointly. The AAP leader mentioned that his proposal is designed to alleviate the financial strain on families with differing income levels and to ensure they receive the same advantages as couples with equal earnings. He humorously remarked that if individuals wish to reduce their tax burden, they should consider getting married.
Yet, beneath his lighthearted comment lies a clever economic idea. Raghav pointed out that in India, the income and expenses of a husband and wife typically pertain to the same household. However, for tax purposes, they are treated as separate entities, which often leads to higher tax rates for many families. He proposed the introduction of a joint income tax return (ITR) filing system in India to ease the financial pressure on married couples.
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Tax relief should be accessible as a family
Raghav Chadha elaborated that in India, only individual incomes are taxed at present, compelling husbands and wives to submit separate ITRs. Their earnings are not aggregated, despite the fact that a married couple jointly manages household expenses, future investments, and child-rearing. Chadha contends that since all financial responsibilities in life are shared, it is illogical to treat them separately within the tax framework. They ought to receive tax relief as a family.
He clarified that under the existing system, in a household where both partners earn Rs 10 lakh each, resulting in a total family income of Rs 20 lakh, the tax liability is zero. This occurs because each individual is taxed separately, and their combined income is not considered. Chadha further illustrated that in a scenario where one partner earns Rs 20 lakh while the other stays home to care for their child, that family incurs a tax of Rs 1.92 lakh on the same income as the first spouse. Currently, there is no option for filing a joint income tax return (ITR) in India.
The AAP MP highlighted that in numerous countries, a husband and wife are viewed as a single economic unit. There, they can file their income tax returns jointly, which allows for the total income and tax rebate of the family to be combined. Raghav Chadha contended that in India, while husbands and wives share their expenses, they are regarded as separate entities during tax season. He believes that implementing a joint filing system could offer tax relief to many families.
Is joint ITR the right choice?
It’s worth noting that joint income taxation for married couples is already established in several developed nations, including France, Germany, the United States, and the United Kingdom. Chadha’s suggestion aims to create fairness for families with a single earner, while also extending similar advantages to families where both partners contribute financially.