Preparations for the presentation of the Budget 2026 have begun in North Block. The Finance Ministry has started receiving pre-budget proposals from various quarters. Among them, a special proposal from the Institute of Chartered Accountants of India (ICAI) has caught everyone’s attention. This proposal proposes the introduction of ‘Optional Joint Taxation’ for married couples. If the Finance Ministry accepts this proposal, there could be a big change in India’s personal income tax structure and family financial management.
Currently, according to the Income Tax Act of India, each person is considered a separate taxpayer. Even if both the husband and wife are earning, they have to file separate Income Tax Returns (ITRs). Even if they have joint income or expenses, the tax is calculated separately.
According to the ICAI proposal, married couples should be given the option of filing a single or joint return. That is, if they want, both of them can show their income and deductions in one file instead of two. This is not mandatory, but couples can choose whether it is more beneficial for them to file separately or together.
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Why is this joint tax regime recommended?
According to ICAI, if this system is introduced, it will reduce the burden on taxpayers and make the process easier. Its main benefits are:
Simplification: Couples will be able to manage their tax affairs together, which will reduce paperwork.
Tax benefits: This can be very beneficial especially for families where only one earns. In a joint tax regime, the tax exemption limits and slabs can be in favour of the family.
International standards: Many countries like the US, Germany, Spain and Portugal have joint filing or joint assessment arrangements for married couples. If India also follows this path, it will be in line with international standards.
What could the tax structure be like in the proposed model?
If this proposal is accepted, the possible outline of the tax structure could be as follows:
Couples will file a single consolidated income tax return under the ‘joint filing option’.
The tax slabs for joint filers may be rearranged. For example, there may be no tax on the total income of a couple up to Rs 6 lakh. After that, 5% tax may be applicable up to Rs 6-14 lakh and higher slabs may apply in the next step.
There may also be changes in the standard deduction, surcharge limits and other exemptions. If both spouses are salaried employees, there may also be a separate standard deduction for both.
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Impact on Indian families: An analysis
The table below shows the impact of this system on different types of families:
| Family Type | Potential Benefits |
|---|---|
| Single-earner couples (one spouse unemployed) | Eligible for joint tax deductions. Return filing becomes easier and more streamlined. |
| Low-income dual-earner couples | May get a higher basic exemption and standard deduction. Overall tax liability can be lower than filing separate returns. |
| High-income dual-earner couples | Limited benefits. Combined income may fall into a higher tax slab, so careful tax planning is required. |
| Families with home loans or children | Better use of standard deduction, Section 80C benefits, and home loan tax deductions with proper planning. |
Challenges and caveats
While the idea is attractive, there are some challenges in implementing it in India. The current PAN card, TDS and TCS systems are designed for individual taxpayers. Joint filing will require a complete redesign of the data architecture. Also, strict guidelines are needed to prevent tax evasion or artificial division of income. In particular, it is important to clarify how deductions like home loan or 80C will be applicable to two individuals.
If this proposal of ICAI is accepted in the Budget 2026-27, it will not only simplify the tax system but also recognize the family as an economic unit. However, since it is completely optional, couples will have the freedom to decide as per their convenience.