The Institute of Chartered Accountants of India (ICAI) has suggested this move, which could benefit millions of households.
India's personal Income-Tax framework is primarily based on individual taxation, which means that each taxpayer gets their own basic exemption limit and deductions. At present, married couples must calculate and pay their taxes separately, despite the fact that they frequently share family incomes and expenses.
As the Union Budget 2026 approaches, there is a growing consensus among tax professionals and policy experts about whether India should recognise married couples as economic units for tax purposes.
About The Proposal
Currently, every individual in India, married or not, is taxed separately. Each spouse must file their ownincome tax return, even if they have shared income or joint expenses. The proposal suggests giving married couples the option to file a single, joint return, combining their incomes and deductions, rather than two separate ones. In other words, a married couple could decide whether to file individually or jointly each year based on their finances.
The proposal recognises a household as a unit, acknowledging shared expenses and assets. It simplifies tax compliance, aligns India with global practices, and could increase compliance and reduce evasion.
How Joint Taxation Might Work (Proposed Model)
Under the joint filing option, married couples could file a singleIncome Tax Return (ITR) with combined income assessed against restructured tax slabs. For example, no tax up to ₹6 lakh and 5% between ₹6–14 lakh.
The model includes adjusted exemptions, surcharge thresholds, and potentially separate standard deductions for each salaried spouse, while maintaining flexibility by allowing couples to file individually if preferred.
Why ICAI Recommends Joint Taxation
ICAI's submission highlights several benefits of joint taxation:
- Simplifies tax compliance and household filing, reducing paperwork and making it easier for couples to manage their tax affairs together.
- Could reduce the tax burden for many households, particularly those with a single earner. Under joint taxation, the exemption thresholds and effective liability may be more favourable.
- Aligns India with global practices, as many countries allow joint filing or joint assessment for married couples.
Challenges and Concerns
Implementing joint taxation in India isn't without challenges:
The optional joint taxation system in India necessitates a comprehensive overhaul of existing tax systems, as the current framework for t
Risk of revenue leakage or misuse if exemption limits and deductions are doubled or significantly enhanced for couples.
Complexity with deductions and exemptions, requiring clear guidelines.
For dual-income couples where both individuals work, a joint taxation system may offer minimal advantage or could potentially increase their tax liability if their combined incomes push them into significantly higher tax brackets. To ensure fairness, the proposed system is optional, allowing couples the flexibility to choose the regime that is most financially beneficial for them.
What This Means for Indian Households
Joint taxation could benefit:
- Single-earner couples with lower tax liability and simpler ITR filing.
- Dual-earner couples with modest incomes, who could benefit from higher basic exemptions and standard deductions.
- High-income dual-earner couples may see limited benefit, as their combined income could push them into a higher tax bracket, necessitating a careful evaluation.
- For families with children, home loans, and medical expenses, the system could allow for the better optimisation of key deductions (standard deduction, 80C, 80D, housing benefit).
