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Ahead of the Union Budget 2026, discussions around major income tax reforms are gaining momentum. One of the most talked-about proposals this year is the possible introduction of joint income tax return filing for married couples. If implemented, this move could significantly reduce the tax burden on families, especially those where only one spouse earns or where there is a large income gap between husband and wife.

According to a report by Moneycontrol, the proposal has been formally suggested to the government by the Institute of Chartered Accountants of India (ICAI) as part of its pre-Budget recommendations.

What Is the Proposal About?

Currently, India does not allow joint tax filing for married couples. Even after marriage, a husband and wife are treated as separate individual taxpayers, each with their own exemption limits, deductions, and tax slabs. This system often fails to reflect the financial reality of Indian households, where income, expenses, savings, and investments are usually planned jointly.

ICAI has proposed that married couples with valid PAN cards should be given the option to file a joint income tax return. Importantly, this system would be optional, not mandatory. Couples who find individual filing more beneficial can continue with the existing system, while others can opt for joint filing if it reduces their tax liability.

Why the Current Tax System Feels Outdated

Many taxpayers believe the current individual-based tax system does not align with modern family structures. In a large number of Indian households, one spouse may be earning significantly more than the other, or one spouse may not be earning at all due to caregiving responsibilities.

Under the present system:

• The non-earning spouse’s basic exemption limit goes unused

• Lower tax slabs remain unutilised

• Overall family tax liability increases unnecessarily

Experts argue that a joint return system would address this imbalance and make taxation more equitable for families.

Global Precedents: How Other Countries Do It

Joint tax filing is already a well-established practice in several developed economies, including the United States and Germany. In these countries, married couples can combine their income and file a single return, often resulting in lower overall tax outgo.

ICAI believes that adopting a similar framework in India would modernise the tax system and align it with global best practices.

How Joint Tax Filing Can Reduce Tax Burden

The biggest advantage of joint tax filing is that the combined household income is assessed under a separate tax slab structure. This is particularly beneficial for families where one spouse earns significantly more than the other.

Some key benefits include:

• Better utilisation of basic exemption limits

• Income averaging between spouses

• Lower effective tax rate for single-income households

• Greater savings through tax deductions and exemptions

Couples could also jointly optimise tax benefits on home loan interest, health insurance premiums, and tax-saving investments more efficiently.

ICAI’s Key Recommendations Explained

In its proposal, ICAI has suggested several structural changes to make joint taxation effective:

Optional System

Joint filing should be a choice, not an obligation. Couples must retain the flexibility to file separately if they prefer.

Higher Basic Exemption Limit

ICAI has recommended doubling the basic exemption limit under joint taxation. As per the proposal:

• Income up to ₹8 lakh would be tax-free

• Tax slabs would gradually increase with income

• The highest tax rate of 30% would apply only when combined income exceeds ₹48 lakh

Fair Slab Structure

Tax slabs should be designed keeping household income in mind, ensuring fairness across income groups.

Boost to Financial Planning and New Tax Regime

Tax experts believe joint filing could significantly improve household financial planning. According to CA Priyal Goel Jain of Dinesh Arjav & Associates, joint filing would simplify investment structures, encourage long-term planning, and make the new tax regime more attractive, even with fewer deductions.

Joint taxation could also help families make better use of retirement savings, insurance planning, and asset allocation.

What to Expect from Budget 2026

With Budget 2026 approaching, expectations are high that the government may seriously evaluate ICAI’s recommendation. If introduced, joint tax filing could mark a landmark reform in India’s personal taxation system, offering relief to middle-class families and recognising the economic unit of the household rather than just the individual.

For millions of married taxpayers, Budget 2026 could bring a more practical, family-friendly tax structure—one that reflects real-life financial dynamics and eases long-term tax pressure.