Budget 2026: How income‑tax slabs and rates may look under ICAI's joint taxation proposal

According to the ICAI, the current basic exemption limit of ₹4 lakh under the new regime and ₹2.5 lakh under the old regime is inadequate for families dependent on single-earning members. This inadequacy may tempt single earners to explore ways to take advantage of individual exemption limits by transferring their income to each family member.

"For example, under the Income-tax Act, every member in a family in individually entitled to basic exemption limit of Rs ₹4 lakh separately under default regime/₹2.50 lakh under the optional regime. However, in India, even today many of the families are supported by a single individual, with no separate earnings for the spouse and children. Consequently, the individual adopts ways and means to transfer income in the hands of other family members," ICAI said.

According to ICAI, the government can curb the above practice by offering an option for joint taxation for married couples by filing a joint return of Income.

"Individuals may be given an option to pay tax under the Joint Taxation Scheme. They can choose to pay tax individually under the present scheme of taxation or opt for joint taxation of self and spouse, both of whom should possess a valid Permanent Account Number (PAN)," ICAI said.

Such a system can have a double exemption limit along revised tax slabs and rates as follows:

Income tax slabs and rates under proposed joint taxation for married couples

The income-tax slabs and rates under joint taxation for married couples may look as follows, based on ICAI's proposal, provided the government accepts it.

Apart from the above, the ICAI has also suggested raising the threshold for levy of surcharge from ₹50 lakh to ₹75 lakh for single earners and to ₹1.5 crore under joint taxation for married couples. It has also proposed the following surcharge rates based on joint income of married couples:

• Where total income > ₹1.50 crore but does not exceed ₹3 crore – surcharge @ 10% of tax

• Where total income > ₹3 crore but does not exceed ₹5 crore - surcharge @ 15% of tax

• Where total income > ₹5 crore - surcharge @ 25% of tax on total income

Joint taxation status

The joint taxation system already exists in countries like the USA.

Finance Minister Nirmala Sitharaman will present the Union Budget 2026 on February 1, 2026.