In income tax law in India, “Previous Year” means the financial year in which you earn the income. It is the year just before the year in which you file your tax return and pay taxes on that income.
The Financial Year in India starts on 1st April and ends on 31st March of the next year.
So, the “Previous Year” is always the financial year before the “Assessment Year” (the year in which income is assessed and tax is paid).
In simple terms, The Previous Year is the year in which you earn money, and the next year, called the Assessment Year, is when you file your tax return and pay tax on that income.
Timeline:
| Income Earned In (Previous Year) | Income Tax Return due for filing and taxes if any 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 |
Examples to Understand “Previous Year”
- You worked and earned a salary from April 2024 to March 2025. This period is your Previous Year 2024–25. You will file your tax return for this income in Assessment Year 2025–26.
- You ran a shop and earned profits during 1 April 2023 to 31 March 2024. That’s your Previous Year 2023–24. You’ll pay tax on this in AY 2024–25.
- You did freelance work and earned ₹3 lakhs between June 2022 and March 2023. That income falls in the Previous Year 2022–23. You’ll be taxed in AY 2023–24.
- You sold a plot of land in September 2024 and made profit. That gain is part of your Previous Year 2024–25 income. Tax will be filed in AY 2025–26.
- You won ₹1 lakh in a lottery in January 2025. This is the income of Previous Year 2024–25. ITR filed and Tax is paid in AY 2025–26.
- You gave your house on rent and earned money from April 2023 to March 2024. This is the Previous Year 2023–24. You file an IT return in AY 2024–25.
- You earned ₹20,000 interest in the year 2022–23. Previous Year = 2022–23. Tax is paid in AY 2023–24.
- You joined your first job in October 2024. All income till March 2025 is part of Previous Year 2024–25. File return in AY 2025–26.
Summary
| Term | Meaning |
| Previous Year | The year in which you earn the income |
| Assessment Year | The year in which you file the return and pay tax |
Quick Tips
- You earn in one year (Previous Year), and pay tax in the next year (Assessment Year).
- Previous Year (PY) = Earn year, Assessment Year (AY) = Tax year
- You always pay tax in the AY for income earned in the PY
- For every AY, the corresponding PY is the year just before it
