A person with no existing source of income sets up a business on 1 September 2026. When does the business’s first tax year begin under the Income-tax Act, 2025?
Question and options
A person with no existing source of income sets up a business on 1 September 2026. When does the business’s first tax year begin under the Income-tax Act, 2025?
1 September 2026
1 January 2027
1 April 2026
1 April 2027
Answer and explanation
Correct answer: A - 1 September 2026
Under section 3(2) of the Income-tax Act, 2025, the tax year of a newly set-up business begins on the date of setting up and ends with that financial year, here on 31 March 2027. It does not go back to 1 April 2026, the start of the financial year.
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