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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Concepts in Taxation

Under the Indian income tax framework, the 'previous year' for assessing the income of a person who earns income during the financial year 1 April 2025 to 31 March 2026 is generally:

The previous year is FY 2025-26, and the income earned in it is assessed in the next year, AY 2026-27. Indian tax law taxes income of the previous year in the assessment year that follows, so the two years are never the same.

  1. AFY 2025-26, with the assessment year being AY 2026-27Correct
  2. BFY 2026-27, with the assessment year being AY 2025-26
  3. CFY 2025-26, with the assessment year being AY 2025-26
  4. DThe calendar year ending 31 December 2025

Explanation

Income earned in a financial year (the previous year) is taxed in the following assessment year. Income earned during 1 April 2025 to 31 March 2026 is therefore assessed in AY 2026-27. The option reversing the years confuses the assessment year with the previous year.

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