Union Budget 2026: Married Couples May File Joint Tax Returns Under ICAI Proposal — Who Benefits, Who Loses?

Union Budget 2026 has rolled out some big announcements… but there’s one proposal that could seriously change life for married couples. Big tax relief ahead? Or a surprise tax burden? Let’s break it down. Institute of Chartered Accountants of India (ICAI)’s idea of a joint tax system could mean major relief for single-income families and retired couples, making it easier to use home loans and investments smartly. But for high-earning couples, this same rule could actually backfire — their combined income could push them into higher tax slabs, surcharges, and bigger tax bills. So how does this system work, who benefits, who loses, and is it really a game-changer for you? To learn about all the details CA Mrinal Mehta, Joint Secretary, Bombay Chartered Accountants' Society (BCAS) shared some insights and answered FAQs about the proposal.

FAQs About Joint Tax System:
Question: In which income scenarios does the proposed Joint Tax System actually reduce tax, and at what point does it start increasing the tax burden for couples?

Mrinal Mehta: “The proposed Joint Taxation of Married couples can help reduce taxes significantly for families with single earning member or large disparities between the incomes of the spouses.

Under the Joint Taxation Scheme, the threshold exemption available may be enhanced by doubling the exemption limit available to individual taxpayers. Also, the tax slabs may be broadened proportionately.

The basic exemption limit of a non-earning partner (Rs.4 lakh separately under default regime/Rs.2.50 lakh under the optional regime) is not allowed to be adjusted against the income of other spouse as per current law.
 
Under the proposed new Joint tax scheme, the family can avail the benefit of higher basic exemption of Rs 8 lakhs under new regime.”

Question: How will deductions like home loan interest, Section 80C investments, health insurance, and NPS work under a joint return — will limits also be doubled or capped?

Mrinal Mehta: “The proposed joint taxation scheme should allow a doubled limit for deductions towards tax savings investments, home loans, mediclaim etc.”

Question: What happens in sensitive situations like separation, divorce, or the death of one spouse — who bears tax liability under a joint tax system?

Mrinal Mehta: “In case of separation or death of one spouse, the income tax returns for the subsequent periods would be required to be filed individually and the benefits of joint return may not be available.”

Question: How practical is implementation from a compliance angle — especially for TDS, Form 16, PAN linkage, and employer payroll systems?

Mrinal Mehta: “IT Systems and tax portal would be required to be overhauled to tackle the issue of seamless flow of tax credits of TDS, Advance Tax etc.”

Question: If this system is optional, what key factors should couples evaluate before choosing between individual and joint filing every year?

Mrinal Mehta: “While evaluating to choose the Joint Taxation system, the couples should consider the following
Income Slabs - The joint taxation is beneficial if one partner earns significantly more than the other.
Joint Liability - Both spouses are equally responsible for all taxes, interest, or penalties owed, meaning one person's tax fraud makes both liable.

Transparency and Trust - Income Tax returns entail complex and detailed disclosures of assets, liabilities and income sources. Couples need to ensure true and correct by both partners.”

India currently follows an individual income tax filing system, requiring every person — married or not — to file returns separately, even though married couples often share a household, expenses, and depend on a single income. The Institute of Chartered Accountants of India (ICAI) has proposed an optional joint tax filing system exclusively for married couples ahead of Budget 2026 on February 1. Under this model, couples could continue filing separately or choose joint filing, combining both incomes into one return while retaining separate PAN cards. ICAI suggests doubling tax slabs, offering zero tax on combined income up to ₹6–8 lakh, 5% tax from ₹6–14 lakh, and 30% only beyond ₹48 lakh, along with raising the surcharge threshold to ₹1.5 crore. Single-income households, retired couples, and families with low-earning spouses would benefit most. However, high-income couples could face higher taxes, along with concerns over liability, system changes, and administrative complexity. The proposal awaits a decision in Budget 2026.