India: One Transition-Year Return, Not Two
India’s official Income Tax Department FAQ explains that income earned during financial year 2025–26 is reported for Assessment Year 2026–27 under the Income-tax Act, 1961. Taxpayers do not file both an AY 2026–27 return and a separate Tax Year 2026–27 return for the same income. The new tax-year framework applies to income earned after the transition point.
For individuals, Hindu undivided families, and businesses with cross-border income, the practical priority is to preserve records showing the period in which income was earned. This is particularly important for:
- Salary earned while moving between countries;
- Foreign bank interest and investment income;
- Remote-work or consulting receipts;
- Foreign tax credits and withholding certificates; and
- Residency evidence needed under an applicable tax treaty.
Country-Specific Rules Still Apply
A South Asian taxpayer should not assume that an Indian filing position automatically applies elsewhere in the region.
- Pakistan: FBR’s published income-tax due dates generally require individuals and associations of persons to file by 30 September, while companies generally file by 31 December or by 30 September where a special tax year applies.
- Bhutan: The Department of Revenue and Customs administers the Income Tax Act of Bhutan 2025 and related rules, which came into force from 1 January 2026 unless otherwise specified.
- Nepal: The Inland Revenue Department describes self-assessed income-tax returns as generally due within three months after the end of the income year, with a possible extension of up to three months on application.
- Sri Lanka: The Inland Revenue Department maintains a separate 2026 tax calendar and requires taxpayers to follow Sri Lankan payment and return dates.
- Bangladesh: NBR guidance states that VAT returns are generally due by the 15th day of the following tax period, subject to the specific statutory rules.
Practical Example
An Indian citizen who worked in India for part of 2025–26 and in Sri Lanka afterward should first determine tax residence under each country’s domestic law and then examine the applicable treaty. The taxpayer should separately track Indian salary, Sri Lankan salary, days of presence, employer withholding, and any foreign-tax-credit claim.
Action Checklist
- Separate income by country and earning period.
- Confirm domestic filing obligations in each country.
- Review treaty residence and tie-breaker rules.
- Retain foreign withholding certificates and proof of payment.
- Use the correct assessment year or tax year in each filing portal.
The central lesson is that India’s transition-year clarification is India-specific. It should not be treated as a regional filing rule.