Budget Expectation 2026: If implemented, this system would allow husbands and wives to file their income tax returns together. This could provide relief, especially to families where the sole breadwinner is responsible. If implemented, this proposal could potentially save millions of rupees in taxes, especially for single-income families.
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Budget Expectation 2026: Ahead of the Union Budget 2026, a new debate regarding taxation has intensified. It is believed that the government may introduce the option of joint taxation for married individuals. If implemented, husband and wife will be able to file their income tax returns together. This could provide relief, especially to families where the sole breadwinner is responsible. If implemented, this proposal could potentially save lakhs of rupees in tax, especially for single-income families.
Ahead of the budget, the Institute of Chartered Accountants of India (ICAI) has issued a specific recommendation to the Finance Ministry. It has recommended giving husbands and wives the option to file joint returns. Currently, husbands and wives are required to file separate returns.
Currently, the new tax system is the default for income tax returns. However, taxpayers can also choose the old tax system. Both have different tax slabs, with tax rates increasing as income increases. Under the new tax system, there is no tax on an annual income of Rs 3 lakh, while under the old tax system, the tax rate applies to Rs 2.5 lakh annually. In both cases, this threshold applies separately to each family member.
Increasing Burden on Married People
Many households have only one spouse employed or working. The other spouse takes care of the home, children, and the elderly. While this work is crucial, it is often overlooked in the tax system. Consequently, such families face a higher tax burden.
Currently, every individual in India is required to pay separate taxes on their income, even if they are married. Both spouses are entitled to different basic exemptions, slabs, and deductions. This means that the other spouse is not able to fully benefit from tax exemptions despite being married.
What is the Joint Taxation System?
This means that married couples must file their income tax returns together, combining their income. This requires both to have PAN cards. It is believed that the basic exemption limit may also be increased.
For example, if a single individual currently receives a tax exemption of up to ₹3 lakh, this limit could be increased to ₹6 lakh or more under joint filing. This will directly benefit middle-class families. Furthermore, home loan interest, health insurance, and other deductions can be better adjusted. Even if both spouses earn, they are expected to receive separate standard deductions.
Relief on surcharges is also possible
Furthermore, relief may be available regarding surcharges. Currently, a surcharge is levied on incomes above ₹50 lakh, but under joint taxation, this limit could be raised to ₹75 lakh or more. This will also provide relief to families in the higher tax bracket. If implemented, this proposal would be considered a major and historic change in India’s tax system. This would reduce total taxable income, leaving families with more money to spend.
Joint Taxation System in These Countries
Many countries, such as the United States, Germany, Spain, and Portugal, allow married couples to file joint tax returns. There, the family is considered a single economic unit. India could also simplify and modernize its tax laws by adopting such a system.
