Ahead of the Union Budget 2026-27, married taxpayers in India could see potential tax relief, as the Finance Ministry is examining the option of introducing joint taxation. If accepted, the proposal would allow married couples to file a combined income tax return, a move that could particularly benefit single-income households.
At present, the proposal remains under consideration and has not yet been formally announced.
ICAI’s Recommendation on Joint Taxation
The idea of joint taxation has been recommended by the Institute of Chartered Accountants of India (ICAI). The recommendation is based on international tax systems such as those in the United States and Germany, where married couples are permitted to file joint returns.
ICAI has suggested that a similar optional framework could be explored in India to make the tax system more equitable for families.
How the Current Tax System Treats Married Couples
Under the existing income tax regime, each individual is taxed separately, regardless of marital status. Both spouses are entitled to separate exemptions, tax slabs, and deductions.
However, in households where only one spouse earns, the non-earning spouse’s exemptions and deductions often remain unused, resulting in a higher overall tax burden.
What Is Joint Taxation?
Joint taxation would allow married couples to combine their incomes and file a single tax return. As proposed, the system would be optional, giving taxpayers the choice to continue under the current individual taxation framework or opt for joint filing.
Both spouses would need to possess a valid Permanent Account Number (PAN) to file jointly.
Why Joint Taxation Is Being Considered
Supporters of joint taxation believe it could provide several benefits:
- Tax relief for single-income or uneven-income households
- Better utilisation of exemptions and deductions, such as those for home loan interest and health insurance
- A simplified approach by treating the family as one economic unit
Possible Changes to Exemption Limits and Tax Slabs
Experts suggest that if joint taxation is introduced, the basic exemption limit and tax slabs could be adjusted proportionately. For example, if an individual exemption limit currently stands at ₹3 lakh, the joint threshold for couples could be higher than the individual limit, offering relief to middle-class families.
However, these changes remain illustrative and not yet finalised.
Surcharge Relief under Joint Taxation
Currently, incomes above ₹50 lakh attract a surcharge. Experts have proposed raising this threshold to ₹75 lakh. Under a joint taxation regime, surcharge thresholds could also be revised proportionately, potentially reducing tax pressure on families with higher combined incomes.
If both spouses earn, it has been suggested that each should continue to receive a separate standard deduction, ensuring parity with the existing system.
Global Practices and the Indian Context
Countries such as the US and Germany allow joint tax filing for married couples, recognising households as a single financial unit. Adopting a similar optional system in India could help modernise the tax structure while retaining flexibility for taxpayers.
When will Budget 2026 be Presented?
The Budget Session of Parliament is expected to begin on January 28 and continue until April 2. The Union Budget 2026–27 is scheduled to be presented on February 1 by Finance Minister Nirmala Sitharaman.
Source: NDTV