What is ICAI’s proposal on joint taxation of married couples for Budget 2026, and how can it help taxpayers?

Ahead of the Union Budget 2026–27, the Institute of Chartered Accountants of India (ICAI) has proposed introducing an optional joint taxation system for married couples in India. The suggestion forms part of ICAI’s pre-Budget recommendations aimed at simplifying tax compliance, improving fairness in taxation, and strengthening overall tax administration.

At present, Indian tax laws do not allow spouses to file a joint income-tax return. Each individual is taxed separately, regardless of marital status or household income structure.

What is the current tax treatment for married couples?

Under the existing system, married couples are treated as separate taxpayers and must file individual returns. This structure works relatively well for dual-income households, as both spouses can independently utilise exemption limits, deductions, and rebates.

However, the system can be less equitable for single-income families or households where one spouse earns substantially more than the other. In such cases, the entire tax burden falls on one individual, often pushing income into higher tax slabs.

Why has ICAI suggested joint taxation?

ICAI believes joint taxation could create a fairer tax framework by recognising the household as a single economic unit. The proposal is also intended to discourage tax avoidance, such as income transfers to family members undertaken primarily to reduce tax liability.

Joint taxation is already practiced in countries like the United States and the United Kingdom, where it allows married couples to combine incomes and file a single return.

How can joint taxation help taxpayers?

The proposal could also simplify compliance, as fewer tax returns would be filed per household. ICAI argues that a simpler system would encourage greater voluntary compliance and reduce litigation and disputes with tax authorities.

What are the concerns around implementation?

Tax experts caution that introducing joint taxation in India would require careful policy design. Concerns include potential misuse and issues related to financial independence and equitable treatment of spouses.