Financial Year (FY)

The Financial Year is the 1 April–31 March period in which you actually earn your income. The current relevant FY is 2025-26, which is assessed in AY 2026-27.

What it is

The Financial Year is the twelve-month window — 1 April to 31 March — during which you earn salary, interest, capital gains and any other income. In the language of the Income-tax Act it is often called the "previous year", because the income earned in it is taxed in the following year. So money you earn between 1 April 2025 and 31 March 2026 belongs to FY 2025-26.

Why it matters

Every income figure you report is anchored to a Financial Year, and that FY in turn maps to a single Assessment Year — FY 2025-26 is assessed in AY 2026-27. Deadlines for paying advance tax fall within the Financial Year itself, and your taxable income is computed over this exact period, so knowing which FY a transaction falls in keeps everything reported in the right year.

Example Illustrative

Suppose you sold an asset on 20 March 2026 and another on 5 April 2026. The first sale falls in FY 2025-26 (assessed in AY 2026-27) and the second falls in FY 2026-27 (assessed in AY 2027-28), even though they are only two weeks apart. The 1 April boundary decides which year each one belongs to. Figures are illustrative only.