New Delhi, January 18: Ahead of the Union Budget 2026–27, a major tax reform proposal is drawing attention as it promises significant relief for middle-class families. The Institute of Chartered Accountants of India (ICAI) has recommended introducing an optional joint tax filing system for married couples, a move that could effectively double the basic income tax exemption limit to INR 8 lakh for couples.

Move Towards Household-Based Taxation

Currently, India’s income tax system treats each individual as a separate taxpayer, irrespective of marital status. This often puts single-income households at a disadvantage compared to dual-income families with the same total earnings. Union Budget 2026: Know Date, Time and Live Streaming Details.

In its pre-Budget memorandum, ICAI has argued that the existing framework does not recognise the household as a single economic unit. Allowing spouses to file taxes jointly would reflect the shared financial responsibilities of families and promote tax equity. MSME Expectations From Union Budget 2026: Higher GST Exemptions and Interest Subsidies, Check Details.

How Joint Filing Could Work

Under the proposed model, incomes of both spouses can be combined while filing a single return. Tax experts suggest a revised slab structure for joint filers under the new tax regime:

• Up to INR 8 lakh: Nil tax

• INR 8 lakh to INR 16 lakh: 5% tax

• INR 16 lakh to INR 24 lakh: 10% tax

This structure would allow single-earner households to use the unused exemption limit of a non-working spouse. Analysts estimate that a family earning INR 12 lakh annually could see their tax liability fall by over 60 percent if joint filing is introduced.

Optional and Simplified Compliance

A key aspect of the proposal is flexibility. Married couples can choose between joint filing or individual returns, depending on which option results in lower tax liability. Both spouses must have valid PANs to opt for joint filing.

The reform could also simplify compliance by reducing paperwork, as couples would need to file only one consolidated Income Tax Return (ITR) instead of two separate filings.

Global Practice and Budget Watch

Joint taxation is already practiced in countries such as the United States, Germany and France, where tax systems are designed around household income rather than individuals.

As the Finance Minister prepares to present the Union Budget on February 1, expectations are rising that this proposal could be accepted as part of broader direct tax reforms. If implemented, joint tax filing could boost disposable income and offer long-awaited relief to India’s middle-class families.

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(The above story first appeared on LatestLY on Jan 18, 2026 04:39 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).