India, Jan. 26 -- The Institute of Chartered Accountants of India (ICAI) has proposed introducing a joint taxation system for spouses, under which married couples could file a single income tax return by combining their incomes and applying revised tax slabs. Under such a regime, rental income from property would be taxed at the household level rather than being apportioned between spouses based on ownership ratios, as mandated under the current system. Also, even home loan interest deductions would be pooled at the household level rather than duplicated per spouse.

Many rental properties are financed with substantial home loans, especially in the early years, when interest payments often exceed rental income, creating paper losses even ...