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Article"Financial year" and "assessment year" trip up almost everyone filing for the first time, and getting them mixed up causes real filing errors. Here's the simple difference, with examples.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
The financial year is when you earn; the assessment year is the next year, when that income is assessed and filed. Here's the difference.
The financial year (FY) runs from 1 April to 31 March, and it's the period in which you actually earn your income. For example, income earned between 1 April 2025 and 31 March 2026 belongs to FY 2025-26.
The assessment year (AY) is the year immediately after the financial year, in which that income is assessed and the return is filed. So income earned in FY 2025-26 is filed and assessed in AY 2026-27. The AY is always one year ahead of the FY.
You earn in the financial year, and you file in the assessment year. When a form or website asks for the assessment year, it's asking about the year you're filing in — which is the year after the income was earned.
Returns, tax payments and forms are labelled by assessment year, so selecting the wrong one — picking the FY when the AY is needed — sends your tax to the wrong year. This is a common first-timer mistake that creates mismatches and demands.
For income earned in FY 2025-26 (1 April 2025 to 31 March 2026), the assessment year is AY 2026-27. Budget 2026 didn't change the slabs, so FY 2025-26 and FY 2026-27 are taxed the same way — but they're still assessed in their own respective assessment years.
The financial year is when you earn the income; the assessment year is the next year, when it's assessed and filed. The assessment year is always one year ahead of the financial year.
AY 2026-27 — income earned between 1 April 2025 and 31 March 2026 (FY 2025-26) is filed and assessed in assessment year 2026-27.
You file the return for an assessment year, covering the income of the previous financial year. When a form asks for the AY, it means the year you're filing in.
Confused about which year to file for? Write to the firm and we'll file your return for the right assessment year.