It is not required for married couples to file Income Tax jointly but they may choose to do so if that allows them to manage their finances better. Moreover, depending on their situation, joint filing of taxes might provide them with some kind of tax relief which they would not have been able to avail in case they submitted their returns separately. The tax payable might be lower than the combined taxes. The standard deductions might also be higher and one might qualify for tax benefits that do not apply to other filing statuses.
If you are unsure about whether to file the taxes jointly or separately, then it is advisable to make both the calculations together and see how much benefit can be derived from both, and then finally file with the option that gives you the highest gain. Income tax form 16 is a certificate issued by an employer. Certain rules in this case might help you make a better decision to file ITR.
It is important to know when one can actually file a joint return with the spouse:
This can actually happen of course, when one is considered legally married. Even if the couple is divorced, they would be considered married if the divorce decree is not received. Hence, one cannot be legally separated by court order.
In case of joint filing, both must sign the return the document. The income tax form 16 A has to be filled in jointly and signed.
The married status would determine the standard deduction amount and which tax rates would be applicable for them. There are rates and brackets that your CA would be able to tell you about in details. Some couples also have joint home loans and when they file their return together, they are both eligible for the tax deductions under Section 80C of the IT Act.
There are taxes that do not apply till the joint income of the spouses reaches a particular threshold but individually one of the spouses might have had to pay taxes. This mostly happens if there is a vast difference in the earning capacity of the spouses but this is balanced out while filing the return jointly.
However, there are a few risks of filing a joint married return as well. It is important that both the spouses report all their incomes, deductions and credits on the same return when they file jointly and both have to take responsibility for the accuracy of the information. If any of the spouses withholds some information, then both will be held responsible and will be charged with penalties and subjected to action. Documents have to be submitted by both the spouses and both will be liable for any errors in them, irrespective of whom they belong to.
Rules of getting income tax exemption jointly can be sometimes complicated and for those who are doing this the first time, it is advisable if they take help from a tax professional in this matter.
In case one of the spouses is deceased during the tax year, one can still file a joint return with the spouse as they are considered married the whole year. However, death certificate has to be provided the next year and one can go back to filing the returns as a single tax payer.
In India, incidents of filing returns jointly are still low but it is fast gaining momentum considering the fact that most household now have both spouses working. The rise in numbers show the way in which the tax scenario in India is changing and new reforms might kick in soon to make this an even better option.