Assessment Year
Definition
The year following the financial year in which income is assessed, taxes are calculated, and income tax returns are filed with the Income Tax Department. For example, income earned in FY 2025-26 (1 April 2025 to 31 March 2026) is assessed and taxed in AY 2026-27. The ITR filing due date for salaried individuals is 31 July of the assessment year. Both FY and AY run from April 1 to March 31.
Why is Assessment Year Important?
Navigating the Indian tax system requires a clear understanding of terms like Assessment Year. With the introduction of the new income tax regime alongside the old one, taxpayers must evaluate their deductions, exemptions, and tax brackets carefully. This concept is a key component in optimizing your tax liabilities under the Income Tax Act and GST framework.
Proper tax planning using this metric can help individuals and businesses maximize their take-home income while remaining fully compliant with government regulations. We provide free tax calculators to help you estimate these figures accurately and make informed decisions before filing your returns.
What is Assessment Year (AY)?
The Assessment Year (AY) is the 12-month period (April 1 to March 31) immediately following the Financial Year (FY), during which income earned in the preceding FY is assessed, evaluated, and taxed by the Income Tax Department of India.
In simple terms: you earn income in the Financial Year and file your tax return in the Assessment Year.
Financial Year vs Assessment Year — Mapping Table
| Financial Year (FY) | Assessment Year (AY) | Income Earned During | ITR Filing Due Date |
|---|---|---|---|
| FY 2025-26 | AY 2026-27 | 1 Apr 2025 – 31 Mar 2026 | 31 Jul 2026 |
| FY 2024-25 | AY 2025-26 | 1 Apr 2024 – 31 Mar 2025 | 31 Jul 2025 |
| FY 2023-24 | AY 2024-25 | 1 Apr 2023 – 31 Mar 2024 | 31 Jul 2024 |
| FY 2022-23 | AY 2023-24 | 1 Apr 2022 – 31 Mar 2023 | 31 Jul 2023 |
| FY 2021-22 | AY 2022-23 | 1 Apr 2021 – 31 Mar 2022 | 31 Jul 2022 |
| FY 2020-21 | AY 2021-22 | 1 Apr 2020 – 31 Mar 2021 | 31 Dec 2021 (extended) |
| FY 2019-20 | AY 2020-21 | 1 Apr 2019 – 31 Mar 2020 | 31 Dec 2020 (extended) |
| FY 2018-19 | AY 2019-20 | 1 Apr 2018 – 31 Mar 2019 | 31 Aug 2019 |
| FY 2017-18 | AY 2018-19 | 1 Apr 2017 – 31 Mar 2018 | 31 Aug 2018 |
| FY 2016-17 | AY 2017-18 | 1 Apr 2016 – 31 Mar 2017 | 31 Jul 2017 |
Key Differences Between FY and AY
| Aspect | Financial Year (FY) | Assessment Year (AY) |
|---|---|---|
| Also Called | Previous Year (PY) in tax law | Assessment Year |
| Hindi Name | वित्तीय वर्ष (Vittiya Varsh) | निर्धारण वर्ष (Nirdharan Varsh) |
| Purpose | Period in which income is earned | Period in which income is assessed and taxed |
| Duration | April 1 to March 31 | April 1 to March 31 (next year) |
| Example | FY 2025-26 (Apr 2025 – Mar 2026) | AY 2026-27 (Apr 2026 – Mar 2027) |
| Tax Payments | Advance tax, TDS deducted during this year | Self-assessment tax paid, ITR filed, refund claimed |
| On ITR Form | Not directly shown | You select AY when filing ITR (e.g., AY 2026-27) |
Why Does the ITR Form Use Assessment Year?
When you file your income tax return on the e-Filing portal, you select the Assessment Year, not the Financial Year. This is because:
- Income earned in a Financial Year cannot be fully computed until the FY ends on March 31st
- Events like job changes, capital gains, rental income, and investments continue throughout the FY
- The Assessment Year is when the Income Tax Department can assess your complete income and verify your tax liability
- Section 2(9) of the Income Tax Act defines AY as the period of 12 months commencing on April 1 every year
Practical tip: When filing ITR for salary earned from April 2025 to March 2026, select AY 2026-27 on the ITR form.
ITR Filing Deadlines by Assessment Year
| Return Type | Due Date | Applicable To |
|---|---|---|
| Original ITR (Section 139(1)) | 31 July of AY | Individuals, HUFs (non-audit cases) |
| Audit Cases | 31 October of AY | Businesses requiring tax audit under Section 44AB |
| Transfer Pricing | 30 November of AY | Companies with international transactions |
| Belated Return (Section 139(4)) | 31 December of AY | Any taxpayer who missed the original deadline |
| Revised Return (Section 139(5)) | 31 December of AY | Correcting errors in the original return |
| Updated Return (Section 139(8A)) | Up to 4 years from AY end | For declaring previously unreported income (with additional 25-50% tax) |
Basic Exemption Limits for AY 2026-27
| Tax Regime | Age Group | Exemption Limit |
|---|---|---|
| New Regime (Default) | All individuals | ₹4,00,000 |
| Old Regime | Below 60 years | ₹2,50,000 |
| Old Regime | 60-80 years (Senior Citizen) | ₹3,00,000 |
| Old Regime | Above 80 years (Super Senior) | ₹5,00,000 |
Under the New Tax Regime for AY 2026-27 (FY 2025-26), effectively no tax is payable on income up to ₹12,00,000 due to the revised slab structure and rebate under Section 87A.
Common Confusions — Clarified
- 'Previous Year' = Financial Year — In the Income Tax Act, what we call FY is legally termed 'Previous Year'. Don't confuse 'previous year' with the calendar year before the current one
- AY is NOT the calendar year — AY runs April to March (Indian fiscal year), not January to December
- TDS is deducted in the FY, not AY — When your employer deducts TDS from your salary in FY 2025-26, you claim credit for this TDS when filing ITR in AY 2026-27
- Form 26AS and AIS show FY data — Your annual tax statement (Form 26AS) and Annual Information Statement (AIS) show transactions from the Financial Year. You use this data to file ITR in the corresponding Assessment Year
- Advance Tax is paid during FY — If you have tax liability beyond TDS, you pay advance tax in quarterly instalments during the FY itself (15 Jun, 15 Sep, 15 Dec, 15 Mar)
Practical Tips
- Always double-check the AY when filing ITR — selecting the wrong AY is one of the most common filing errors and can lead to a defective return notice
- Start gathering documents early — Collect Form 16, Form 26AS, AIS, investment proofs, and capital gain statements before July to avoid last-minute rush
- For salaried individuals: Your Form 16 for FY 2025-26 will be provided by your employer by 15 June 2026. Use it to file ITR for AY 2026-27 by 31 July 2026
- For business income: If your turnover exceeds ₹1 crore (₹10 crore for digital transactions), you need a tax audit. Your due date extends to 31 October of the AY