Budget 2026: How joint ITR filing for married couples can reduce tax liability?

Tax Filing

• ICAI proposes optional joint taxation for married couples in India.
• Joint filing could lower tax for single-income families and simplify compliance.
• Proposal to double exemption limit and expand tax slabs for joint returns.

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The Institute of Chartered Accountants of India (ICAI) has suggested an optional system of joint taxation for married couples in its pre-Budget submission to the finance ministry.

Under the existing Income-tax framework, individuals are taxed separately, with each taxpayer entitled to a basic exemption limit of Rs 4 lakh under the default tax regime and Rs 2.5 lakh under the optional regime. While this suits families where both spouses earn, ICAI noted that many households still depend on a single income.

According to the institute, this structure often encourages families to shift income on paper to other members in order to make use of multiple exemption limits. Introducing a voluntary joint taxation option could help remove this incentive.

Unlike USA, Germany, Portugal which allows married couple to file joint income tax return, Indian Income Tax Act currently does not provide for such joint return by married couple. “In the Budget 2026 if the provision of joint return by married couple is introduced in India, it will benefit to the taxpayers. Allowing married couple to file single return will definitely simplified compliances considering the clubbing provisions under section 64 when the property/investment is acquired in joint name or funding is provided by another spouse,” said Gopal Bohra, Partner -Tax, N.A.Shah Associates.

What are join filing tax bracket in United States

The United States follows a Married Filing Jointly (MFJ) system, where joint tax slabs are broadly double the single-filer thresholds, allowing equitable income averaging for married households.

U.S. Federal Income Tax Brackets – 2026

This design ensures that a married couple earning a combined income is not pushed prematurely into higher tax brackets simply because income is earned by one spouse.

Several other developed economies, including parts of Europe, also offer variants of joint or family-based taxation, reinforcing the global trend toward household-based assessment.

What did ICAI say in proposal?

Under the proposal, married couples with valid PANs for both spouses would be allowed to file a joint return and choose to be taxed together. Taxpayers would continue to have the flexibility to remain under the existing individual taxation system if they prefer.

ICAI has recommended that the basic exemption limit under joint taxation be doubled, with tax slabs expanded in line with combined household income. In the structure outlined by the institute, income up to Rs 8 lakh would not attract tax, while higher slabs would apply progressively, with the top rate of 30 percent kicking in for income above Rs 48 lakh.

How will joint taxation benefit families?

Joint taxation will primarily benefits single-income and uneven-income households, which form a substantial part of India’s demographic reality. Under the current system, a non-earning spouse’s basic exemption limit and lower tax slabs remain unused. A joint filing regime would unlock this idle capacity, enabling income averaging, thereby lowering the overall tax incidence on the family.

This approach would reduce the tax burden on single-earner families, support homemaker households, and remove the implicit penalty currently borne by families where one spouse steps out of the workforce for childcare or eldercare responsibilities.

“Joint filing encourages cohesive household financial planning, simplifies investment structuring, and aligns neatly with the government’s vision of a new tax regime with minimal deductions and cleaner slab-based taxation,” said Priyal Goel Jain, CA, Partner NRI Tax Expert - Dinesh Aarjav & Associates, Chartered Accountants

“Retired couples, in particular, would benefit from smoother taxation of pension and investment income, reducing the need for complex tax arbitrage. Over time, this could also lead to lower tax evasion and reduced litigation, as incentives for artificial income-splitting diminish,” Goel said.

However, joint filing may not always be tax effective specially when both spouses are earning high income, and in that event, it might be possible that the combined income pushes the taxpayer in higher tax rate or higher surcharge bracket.