As discussions around Union Budget 2026 gain momentum, a key proposal has emerged that could bring meaningful relief to married taxpayers in India. The Institute of Chartered Accountants of India (ICAI) has formally recommended that the government introduce an option for husband and wife to file a joint income tax return. If accepted, this reform could lower tax liability for millions of families and simplify compliance under the Income Tax Act.

ICAI’s Proposal: A Shift from Individual to Joint Taxation

Currently, India follows an individual-based taxation system, where spouses are required to file separate income tax returns, even if the household relies primarily on a single earning member. In its pre-Budget recommendations to the Finance Ministry, ICAI suggested allowing married couples with valid PAN cards to opt for joint return filing, similar to systems followed in several developed economies.

Under the existing framework, both spouses are taxed separately, regardless of income disparity. While this approach works well for dual-income households, ICAI believes it is less equitable for families where only one spouse earns or where income levels are highly uneven.

Why Joint Tax Filing Could Benefit Indian Families

According to ICAI, a large number of Indian households depend on the income of just one spouse, usually the husband. In such cases, the entire income gets taxed in higher slabs, increasing the overall tax burden. As a result, some families resort to income splitting or asset ownership in the name of other family members purely for tax efficiency, which adds complexity and compliance risks.

Allowing joint taxation would eliminate the need for such arrangements and provide a fairer assessment of household income. ICAI argues that joint filing would reduce tax stress, improve transparency, and encourage voluntary compliance.

How Other Countries Handle Joint Taxation

Several countries already allow or actively promote joint or family-based taxation. For instance, the United States follows the “Married Filing Jointly” (MFJ) system, where couples can combine their incomes and enjoy wider tax brackets compared to single filers. This structure prevents families from being pushed into higher tax slabs solely due to income concentration with one spouse.

Similarly, Germany and Portugal permit joint tax filing for married couples, offering substantial tax advantages. Many European nations also follow family-based taxation models that reduce the effective tax rate on households rather than individuals.

Tax experts believe India can adapt a similar approach while keeping safeguards in place.

Lower Tax Even on Higher Combined Income

One of the biggest advantages of joint filing is that it can delay the applicability of higher tax slabs. For example, when incomes are combined and assessed jointly, the threshold for higher tax rates effectively doubles compared to individual filing. This ensures that families with a single high earner are not disproportionately taxed.

Experts note that this model is particularly beneficial when property is owned jointly, but the funding comes from one spouse. Joint filing would simplify such cases and reduce disputes or documentation challenges.

Flexibility for Taxpayers Is Key

Importantly, ICAI has not suggested making joint filing mandatory. Instead, it recommends that taxpayers should be given the choice to continue with the current individual system or opt for joint taxation, whichever is more beneficial.

The institute has also proposed doubling the basic exemption limit under joint filing. If implemented, families with an annual income of up to ₹8 lakh may not have to pay any tax at all. As income increases, tax rates would apply progressively, with the highest 30% slab kicking in only for households earning above ₹48 lakh annually.

Will Budget 2026 Bring This Reform?

With Budget 2026 approaching, expectations are high that the government may consider structural tax reforms aimed at middle-class relief. Introducing joint income tax returns for married couples would align India with global best practices and address long-standing concerns of single-income families.

While it remains to be seen whether the Finance Ministry will accept ICAI’s recommendation, tax professionals agree that such a move could mark a significant shift towards a more family-centric and equitable tax system in India.

If implemented, joint tax filing could become one of the most impactful personal taxation reforms in recent years—offering simplicity, savings, and fairness to millions of Indian households.