Budget 2026: Joint Tax Filing for Married Couples May Double Exemption to Rs 8 Lakh

As Budget 2026 approaches, the idea of allowing married couples to file joint income-tax returns is gaining momentum, with the Institute of Chartered Accountants of India (ICAI) formally recommending the reform

to the finance ministry. The proposal aims to make India’s tax system more reflective of household finances, particularly for families with a single earning member or uneven income distribution between spouses.In its pre-Budget submission, ICAI argued that India’s current individual-based taxation framework does not adequately capture the economic realities of Indian families. While individual taxation works smoothly for dual-income households, it often disadvantages single-earner families, where the non-working spouse’s basic exemption limit remains unused. This, ICAI noted, frequently pushes households towards income-shifting strategies, increasing complexity and potential compliance risks.How the current system worksAt present, taxpayers are assessed individually. Under the New Tax Regime, the basic exemption limit is ₹4 lakh, while under the Old Tax Regime it is ₹2.5 lakh. The revised New Tax Regime slabs provide zero tax liability for individuals earning up to ₹12 lakh annually, with progressive rates thereafter.ICAI believes this structure overlooks household-level income sharing and expenses, placing a disproportionate burden on families dependent on a single salary.What ICAI is proposingUnder ICAI’s proposal, married couples could opt to file a single, joint income-tax return, with their combined income assessed together. The basic exemption limit would effectively double to ₹8 lakh, while tax slabs would be widened to suit household income levels. The highest tax rate of 30% would apply only to income above ₹48 lakh, instead of the current ₹24 lakh threshold for individuals.The proposal also suggests recalibrating surcharge limits and allowing separate standard deductions for each salaried spouse, even under joint filing. Importantly, the system would be optional, allowing couples to choose between joint and individual filing—whichever results in lower tax liability.Expert views and global parallelsTax experts say the idea deserves serious consideration. Karthik Narayan, Vice President – Title, Tax & Transition at Stellar Innovations, said joint taxation could better reflect shared household expenses and simplify compliance through consolidated digital filings. He added that reforms to both joint taxation and Hindu Undivided Family (HUF) taxation are timely, given the rise of dual-income families and family-run enterprises.Several developed economies, including the US, Germany and Portugal, already allow joint filing for married couples, enabling income averaging at the household level. ICAI believes adopting a similar approach would align India with global best practices while recognising the household as an economic unit.Suggested slab structuresICAI has outlined illustrative slab options, including zero tax on combined income up to ₹6 lakh and a 5% rate between ₹6 lakh and ₹14 lakh. Separately, CA Suresh Surana has proposed a more detailed structure, with full tax exemption up to ₹8 lakh and progressive rates rising to 30% for income above ₹48 lakh.Benefits and challengesThe institute says joint taxation could simplify compliance, reduce the effective tax burden for single-income families, and offer better relief to households facing high expenses such as education, healthcare and home loans. Moderate-income dual-earner couples could also benefit from higher combined exemptions.However, challenges remain. India’s tax infrastructure is deeply built around individual PAN-based filing, TDS and TCS systems, which would require significant redesign. There are also concerns about revenue leakage and the risk that high-income dual-earner couples could face higher tax liability under joint assessment. This is why ICAI has emphasised that the framework must remain elective, not mandatory.What it means for familiesIf introduced in Budget 2026, joint tax filing could be a major relief for single-income households and many middle-class families. Dual-income couples would need to assess their individual situations carefully before opting in, while high-income households may find limited benefit. Still, the proposal marks a significant shift in thinking, one that could reshape how India taxes families rather than just individuals.