In Indian income tax law, the “Assessment Year” is the year immediately following the “Previous Year” in which you file your Income Tax Return (ITR) and pay taxes on the income earned.
It is the year in which the income earned in the Previous Year is assessed (evaluated) by the Income Tax Department.
Financial Year Timeline:
- Previous Year → Year in which income is earned
- Assessment Year → Year in which income is assessed and tax is paid
Key Points:
- The Assessment Year comes right after the Previous Year.
- Income earned in any financial year is taxed in the next year, i.e., the Assessment Year.
- The Assessment Year also includes scrutiny, notices, and assessments by the tax department if required.
Example Timeline:
| Income Earned (Previous Year) | Return Filed & Tax Paid In (Assessment Year) |
| 1 April 2024 – 31 March 2025 | 2025–26 |
| 1 April 2023 – 31 March 2024 | 2024–25 |
| 1 April 2022 – 31 March 2023 | 2023–24 |
Simple Example:
You earned income by freelancing between April 2024 and March 2025. This is your Previous Year 2024–25.
You will file your return and pay tax for this income in Assessment Year 2025–26.
Summary Table:
| Term | Meaning |
| Previous Year | The year in which you earn the income |
| Assessment Year | The year in which you file return and pay tax on that income |
