ICAI Proposes Optional Joint Taxation for Married Couples Ahead of Budget 2026, Seeks Higher Exemption Limits and Surcharge Relief to Reflect Household Realities
The Institute of Chartered Accountants of India (ICAI) has put forward a proposal advocating for an optional joint taxation scheme for married couples, aiming to simplify compliance and acknowledge the family as an economic unit within the tax framework.
New Delhi, December 27: The Institute of Chartered Accountants of India (ICAI) has proposed the introduction of an optional joint taxation system for married couples as part of its pre-Budget representation to the Ministry of Finance. The proposal aims to better align the income-tax framework with Indian household structures and discourage income-splitting practices used to optimise tax exemptions.
At present, individuals are taxed separately, with a basic exemption limit of INR 4 lakh under the default tax regime and Rs 2.5 lakh under the optional old regime. While this system suits dual-income households, ICAI noted that a large number of Indian families still depend on a single earning member, creating distortions in tax planning.
Why ICAI Wants Joint Taxation
According to ICAI, the existing structure often encourages artificial transfer of income to non-earning family members to fully utilise individual exemption limits. An optional joint taxation system, it argued, would reduce such practices while offering flexibility, as couples could choose between individual and joint filing.
Under the proposed framework, married couples with valid PANs would be allowed to file a joint return of income. Those preferring the current system could continue with individual taxation, ensuring that the reform remains voluntary. KVS NVS Recruitment Exam City Intimation Slip 2025 Out for Tier 1 Exam at kvsangathan.nic.in; Know How to Download.
Proposed Slabs and Exemption Limits
ICAI has suggested doubling the basic exemption limit under joint taxation to Rs 8 lakh and proportionately widening tax slabs to reflect combined household income. As per the proposed structure, income above Rs 48 lakh would attract the highest tax rate of 30 percent. The institute noted that similar joint taxation models are already in place in countries such as the United States.
Surcharge and Other Key Recommendations
The institute also raised concerns over the surcharge threshold under the default tax regime, which currently applies once total income exceeds INR 50 lakh. Since the default regime allows fewer deductions, taxpayers often face surcharge despite a lower effective tax burden. ICAI has recommended raising this threshold to at least INR 75 lakh. Under joint taxation, the surcharge threshold could be increased to INR 1.5 crore, with graded rates thereafter. CAT Result 2025 Declared: IIM Entrance Exam Scorecard Out at iimcat.ac.in, Know Steps to Download.
Additionally, ICAI suggested separate standard deductions for spouses who are both salaried and proportionate enhancement of alternate minimum tax thresholds.
Broader Economic Impact
ICAI described joint taxation as a socially equitable reform that recognises the economic contribution of non-earning spouses, particularly homemakers. It added that the move could enhance household purchasing power, boost domestic consumption, and encourage long-term savings, contributing positively to the broader economy.
(The above story first appeared on LatestLY on Dec 27, 2025 05:50 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).