Assessment Year (AY)

The Assessment Year is the 1 April–31 March year in which income earned during the previous financial year is assessed and your return is filed. For income earned in FY 2025-26, the Assessment Year is 2026-27.

What it is

Indian income tax always works one year behind. You earn income during a financial year, and that income is then assessed in the year that immediately follows it — the Assessment Year. So income earned between 1 April 2025 and 31 March 2026 (FY 2025-26) is assessed in AY 2026-27. The return you prepare and verify always refers to its Assessment Year.

Why it matters

Picking the right Assessment Year is the first thing you do on the portal, and getting it wrong records your income against the wrong period. Tax slabs, rebate limits and deduction rules are all defined per Assessment Year, so a figure that is correct for AY 2026-27 may differ in another year. The same AY label appears on your ITR-V and is what you confirm during e-verification.

Example Illustrative

Suppose you earned a salary throughout FY 2025-26 and your employer deducted TDS during that period. When you prepare your return, you select Assessment Year 2026-27, because that is the year in which FY 2025-26 income is assessed. Choosing AY 2025-26 by mistake would map your income to the wrong year. This is an illustrative walkthrough only.