ICAI Proposes Optional Joint Taxation for Married Couples

ICAI Proposes Optional Joint Taxation for Married Couples

Issue: As part of its pre-Budget 2026-27 recommendations, the Institute of Chartered Accountants of India (ICAI) proposed the introduction of an optional joint taxation scheme for married couples to reduce compliance complexity and provide potential tax savings for households.

Facts:

• The ICAI submitted a set of pre-budget suggestions to the government, focusing on litigation mitigation, compliance simplification, and rationalization of income tax provisions.
• The suggestions cover areas like reducing compliance burden and improving tax collections.
• The Institute recently released the updated publication of the Income Tax Act, 2025, signaling its deep engagement with tax reform.

Decision:

The ICAI formally asked the government for the introduction of optional joint taxation for married couples.

Key TakeDowns (Other Key Recommendations):

• Decriminalization: ICAI recommended the decriminalization of certain prosecution provisions and the removal of dual penalty for the same default to reduce the compliance burden.
• E-Ledger System: A mandatory year-wise e-ledger system for crediting TDS/TCS and advance tax payments was proposed to mitigate litigation and tracking issues.
• Presumptive Tax Exclusions: The ICAI asked for the exclusion of F&O trading and speculation business from the scope of presumptive income (Section 44AD). This addresses the anomaly where F&O traders must meet audit requirements if turnover exceeds ₹10 crore, but can otherwise opt for the presumptive scheme with minimum net income of 6%.
• LLP Rationalization: Tax neutral status should be extended to business reorganisation involving limited liability partnerships (LLPs), and TDS provisions on partners’ remuneration should be rationalized.
• Advance Rulings Time Limit: ICAI requested a mandate for prescribing a specific time limit for the acceptance or rejection of an application for advance ruling. ***