Suppose only one spouse earns in a household and also gets ₹6 lakh a year in rental income. If that income is reported in the spouse’s name, tax is payable. But if the rental income is split between spouses, both may fall below the exemption limit, and hence no tax is paid at all.
Now scale this across millions of households, and you start to see why the idea of joint taxation for married couples is once again being discussed after the Institute of Chartered Accountants of India (ICAI) suggested that India should allow spouses to file joint income tax returns.
It may sound very different from how India taxes income today – and in some ways, it is. But it’s also a response to a very real problem. India taxes individuals, while household income is often earned, shared, and managed collectively. This mismatch is exactly what ICAI is trying to address.
What is ICAI proposing?
Instead of forcing married couples to always file taxes separately, ICAI wants to give them an option to file a joint return.
This is only ICAI’s recommendation at this stage, not a change in law.
If a couple chooses to file together, here’s how it would work:
- They’ll file one combined return
- Income will be taxed at the household level, not individually
- The basic exemption limit and tax slabs will be scaled up
- The tax rates will not change
Therefore, if an individual currently gets a ₹4 lakh exemption, a couple filing jointly would get ₹8 lakh, with the slabs scaling up in the same proportion.
So, once the income is taxed as a single household pool, there’s no real incentive to split rent or other income between spouses just to save tax. And reporting becomes more transparent when income is viewed at the household level.
Who benefits and who may not?
Joint-filing can be attractive for certain households. However, the actual benefit depends on how income is spread within a household.
→ Single-earner families, or households where one spouse earns far more than the other, are likely to benefit the most. Pooling income and taxing it together gives them a higher exemption and wider slabs, which can meaningfully reduce their tax outgo.
| Particulars | Individual filing | Joint filing (proposed) |
|---|---|---|
| Spouse A income | ₹15,00,000 | – |
| Spouse B income | Nil | – |
| Total household income | ₹15,00,000 | ₹15,00,000 |
| Basic exemption | ₹4,00,000 | ₹8,00,000 (combined) |
| Taxable income | ₹11,00,000 | ₹7,00,000 |
| Approx. tax payable | Higher overall | Lower overall |
Assumption: Filed under new regime, no deductions considered.
→ For couples where both spouses earn similar incomes, the impact may be limited. Filing jointly may not change the tax outcome much compared to filing separately.
| Particulars | Individual filing | Joint filing |
|---|---|---|
| Spouse A income | ₹8,00,000 | – |
| Spouse B income | ₹7,00,000 | – |
| Total household income | ₹15,00,000 | ₹15,00,000 |
| Tax outcome | – | Largely unchanged |
Assumption: Filed under new regime, no deductions considered.
→ And for some high-income dual-earner couples, joint taxation may not offer any advantage at all. In such cases, individual filing could still make more sense.
This is why ICAI has suggested keeping joint taxation optional, allowing couples to choose what works best for them.
India wouldn’t be reinventing the wheel here. Other tax systems already offer different approaches to taxing married couples. In the United States, married couples can opt to file jointly or separately, depending on what works best for their tax situation. In contrast, countries such as France generally tax married couples as a single household by default, with joint filing being the usual norm rather than a choice.
What does this mean for the government?
From the government’s point of view, joint filing cuts both ways.
On the upside, taxing income at the household level reduces the incentive to split income between spouses. Reporting becomes cleaner, and over time, the ITD may not need to rely as heavily on audits and scrutiny to catch these cases.
But joint taxation isn’t a plug-and-play change. It would mean reworking ITR forms, backend systems, and compliance processes. There’s also the revenue question – if a large number of single-earner households end up paying less tax under a joint-filing option, the government would need to assess how that impacts collections.
These trade-offs are likely why ICAI has proposed joint filing as an optional framework, not a mandatory one, so the system gains transparency without forcing every household into the same model.
What about clubbing of income under Section 64?
Even if joint taxation is introduced, Section 64 would continue to apply in cases such as:
- Transfer of income or assets to relatives other than a spouse
- Income routed through relatives or layered business structures
- Situations where married couples choose to file their returns individually
If couples file joint returns, the ITD won’t have to get involved later through tax audits and checks. By taxing income at the household level upfront, it removes much of the incentive to split income between spouses in the first place.
While we wait to see whether the Finance Minister adopts the ICAI’s recommendations on February 1, 2026 tax planning shouldn’t come to a halt.
Take your HRA, for example, getting it right can have a bigger impact on your take-home salary. If you’re not sure that you’re claiming the right amount, our HRA calculator helps you check your rent receipts against your salary so you don’t leave money on the table.