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Tax Year

Last updated on Oct 27, 2026

The new Income-tax Act, 2025 replaces the term ‘previous year’ and ‘assessment year’ used in the Income-tax Act, 1961. 

Income-tax is levied on the annual income of an individual and income tax is calculated from a period starting from 1st April and ending on 31st March of a calendar year. This is now called a ‘tax year’.1

Tax Year for Businesses 2

However, for businesses or professions newly set up, the “tax year”, where the income is earned, shall be the period beginning with

  • The date of setting up of the business or profession; 
  • The date on which the source of income newly comes into existence, 

and ending with the said financial year. For every subsequent year, the tax year is the regular financial year from 1st April to 31st March.

  1. Section 3, Income-tax Act, 2025. [↩]
  2. Section 3(2), Income-tax Act, 2025. [↩]

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