Income Tax: A year ago, when the Finance Minister announced tax exemption for incomes up to ₹12 lakh, millions of taxpayers were delighted. However, this time, following a demand from the ICAI, joint tax filing is expected to be approved.
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Union Budget 2026: Before the presentation of the 2026 budget, as always, the issue of income tax is being discussed. People are wondering whether the Finance Minister will announce any relief for taxpayers this time, as he did last time. Following the tax exemption for incomes up to ₹12 lakh in 2025, it is now expected that the government may allow joint tax filing. If this system is implemented, both husband and wife will be able to file income tax returns together.
ICAI Makes Pre-Budget Suggestions to the Finance Ministry
The ICAI, the nation’s chartered accountants’ association, has made several pre-budget suggestions to the Finance Ministry. Among them, it calls for allowing married individuals to opt for optional joint tax filing. If the government adopts this decision, it will provide relief to families where a single earning member or where there is a significant income gap. ICAI argues that the current individual tax system does not accurately reflect a family’s true financial situation. Therefore, joint filing will make the tax system more transparent.
These problems were pointed out in the current system
Currently, every individual in the country files taxes separately. Under the new tax regime, income up to Rs 4 lakh is exempt, while under the old regime, income up to Rs 2.5 lakh is exempt. This is fine if both spouses earn. However, in a single-earner family, the non-earner’s exemption is lost. This forces the family into a higher tax slab and sometimes leads to problems like shifting income within the household. The ICAI believes this makes tax planning very difficult and increases compliance risk.
How will joint filing work?
The ICAI has suggested that if both spouses have valid PANs, they can file ITR together. In joint filing, the basic exemption limit will be doubled, meaning income up to Rs 8 lakh will be tax-free. The tax slab will also be determined based on family income. This means 30% tax will be levied only on those earning more than Rs 48 lakh. Each salaried spouse will benefit from different standard deductions. This means zero tax on income up to Rs 8 lakh, 5% on Rs 8-16 lakh, 10% on Rs 16-24 lakh, and 30% on income above Rs 48 lakh.
What will be the benefit?
This change could prove to be a game-changer for many families. Single-earner families will benefit the most, but this exemption will be applicable to the entire family. Both husband and wife will have to file a single return. There will be less need for income shifting, which will reduce tax evasion and errors. Such systems already exist in countries like the US, Germany, and Portugal. Here, the household is considered an economic unit.
Implementing this system will be challenging. The country’s tax system relies on PAN-based individual filing. Implementing this system will require changes to TDS and TCS. Joint filing for high-income dual-earner couples could also increase taxes, so if this option is implemented, it should be kept optional.
