 "What’s India’s tax proposal for married couples that will help them save money?")
Married couples may have something to look forward to in the Union Budget 2026. The Institute of Chartered Accountants of India (ICAI) has proposed introducing optional joint taxation for spouses.
If the Ministry of Finance adopts the demand, it could bring a remarkable change in personal income tax. Such a move will be a huge relief for married taxpayers and will help them save more money.
We take a look.
What has ICAI proposed?
Under the current Indian tax system, every individual, irrespective of their marital status or household income structure, is taxed separately. Everyone has to file their own income tax return (ITR), even if they have shared income or joint expenses. Each spouse gets separate exemptions, slabs, and deductions on their income.
ICAI has proposed reforms in the current tax system. It suggests allowing married couples to combine their incomes and file a single income tax return, as per a Times of India (TOI) report. The institute has recommended introducing this in the Union Budget 2026 as an optional system, which will give spouses the flexibility to choose their preferred method to file ITR.
The proposal is part of ICAI’s pre-Budget recommendations to simplify tax compliance.
How will joint taxation work?
A married couple can file a single consolidated income tax return under the joint-filing option.
ICAI has proposed restructuring tax slabs. For example, no tax up to Rs 6 lakh and 5 per cent between Rs 6–14 lakh.
The joint taxation, as per ICAI’s proposal, could look as follows:
Income range (Rs) Tax rate
Up to 8,00,000 Nil
8,00,001 to 16,00,000 5%
16,00,001 to 24,00,000 10%
24,00,001 to 32,00,000 15%
32,00,001 to 40,00,000 20%
40,00,001 to 48,00,000 25%
Above 48,00,000 30%
There could be adjustments to standard deductions (for salaried earners), exemptions and surcharge thresholds.
It has proposed a hiked surcharge threshold and separate standard deductions for both spouses if salaried.
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View AllICAI has suggested increasing the threshold for levy of surcharge from Rs 50 lakh to Rs 75 lakh for single earners and to Rs 1.5 crore under joint taxation for married couples.
As per reports, it recommended revising surcharge rates based on the joint income of married couples:
When total income is greater than Rs 1.50 crore but less than Rs 3 crore, surcharge could be 10 per cent of tax.
For those who have a total income of more than Rs 3 crore but less than Rs 5 crore, surcharge may be 15 per cent of tax.
When total income exceeds Rs 5 crore, surcharge could be 25 per cent of the tax on the total income.
Why is joint taxation needed?
If India adopts joint taxation, it would join the list of countries such as the United States and Germany that allow married couples to file joint tax returns.
Joint taxation can reduce the overall tax liability, especially for families relying on a single earner. Under joint taxation, the exemption thresholds and effective liability are expected to be more favourable, as per TOI.
ICAI says this will dissuade single earners from splitting income with other family members to take advantage of individual exemption limits.
“For example, under the Income-tax Act, every member in a family is individually entitled to basic exemption limit of Rs ₹4 lakh separately under default regime/₹2.50 lakh under the optional regime. However, in India, even today many of the families are supported by a single individual, with no separate earnings for the spouse and children. Consequently, the individual adopts ways and means to transfer income in the hands of other family members,” ICAI reportedly said.
Joint taxation will help couples to better adjust exemptions for home loan interest and medical insurance.
Dual-earner couples with modest incomes could benefit from higher basic exemptions and standard deductions.
Dual-earner couples with high income can get limited benefits, as their combined income may put them in a higher tax bracket.
The proposal also simplifies tax compliance and household filing. Joint filing could lead to less paperwork, making it easier for couples to manage their taxes together.
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Challenges of ICAI’s proposal
While ICAI’s joint taxation will be good news for married couples, there are many challenges in implementation.
There may be a need for a system overhaul as the current tax filing is designed for individuals. The policy has to be designed carefully, tax experts say.
As per TOI, there is a higher risk of tax avoidance if exemption limits and deductions are doubled or significantly increased for married couples.
Dealing with categories like house-property income, home-loan interest, investments under 80C, medical insurance deduction, etc., for two individuals in a single return will need to be addressed through clear guidelines.
The joint taxation option may not be very attractive for spouses if both have high incomes. This could push them into higher income slabs.
While ICAI’s proposal has brought attention to joint filing, whether India will recognise married couples as economic units for tax purposes remains to be seen.
It had recommended the idea before Budget 2025, but it was not accepted.
Finance Minister Nirmala Sitharaman will present the Union Budget 2026 on February 1, 2026.
With inputs from agencies
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