Income tax written in this representative image.
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Married couples in India may have something to look forward to in the Union Budget 2026 to be presented on February 1.
The Institute of Chartered Accountants of India (ICAI) has proposed introducing an optional joint taxation system for married couples.
If the Union Finance Ministry considers this proposal, it will bring a significant change in personal income tax as it will allow couples to file combined tax returns and help them save money, especially for single-income families.
The suggestion was part of the ICAI’s pre-Budget recommendations aimed at simplifying tax compliance, improving fairness in taxation, and strengthening overall tax administration.
What is the existing system
Under the existing system, every individual pays tax separately, regardless of her/his marital status. This structure works relatively well for dual-income households as both spouses can independently utilise exemption limits, deductions and rebates.
If one spouse earns substantially more than the other, the system can be less equitable. In such cases, the full tax burden falls on one individual, often pushing the income into higher tax slabs.
ICAI proposes changes
Joint taxation means that married couples can combine their incomes and file a tax return together. The ICAI has proposed changes in the current tax system and suggested that married couples be allowed to combine their incomes and file a single income tax return (ITR). It has recommended introducing this in the Union Budget 2026 as an optional system so that spouses can choose their preferred method to file the ITR.
According to the ICAI, joint taxation can create a fairer tax framework by recognising the household as a single economic unit.
Many countries, including the United States, Germany, France, Switzerland, and Portugal, allow married couples to file taxes jointly, treating the household as a single unit. This potentially reduce tax burdens, especially for single-income families, though rules vary from optional to mandatory joint filing.
The optional joint taxation system in India will require a comprehensive change of the current system, as the existing framework for tax filing, tax deducted at source/tax collected at source, and PAN-based tracking is designed for individuals.
It needs to address concerns over any misuse and issues related to financial independence and equitable treatment of spouses need to be addressed.
The Budget Session of Parliament is scheduled to start on January 28 and continue until April 2.
The Union Budget for 2026-27 is scheduled to be presented on Sunday, February 1, by Finance Minister Nirmala Sitharaman.