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Financial Year vs Assessment Year: The 1-Year Offset Explained

TaxUpdated May 20265 min read
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By Arjun Mehta
Lead Writer · Updated May 2026 · Fact-checked by editorial team
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Every Indian taxpayer encounters two confusingly similar terms — Financial Year (FY) and Assessment Year (AY). They are always one year apart, and the wrong choice on the ITR portal selects the wrong tax slab and the wrong refund. This short guide explains why the offset exists, when each applies, and the simple rule to remember.

The basic definitions

Financial Year (FY): The 12 months from 1 April to 31 March in which you actually earn income and pay tax. India follows the FY (not the calendar year).

Assessment Year (AY): The next FY, in which you assess (declare) the income earned during the previous FY and file your ITR.

So FY 2025-26 = 1 April 2025 to 31 March 2026. The corresponding AY = AY 2026-27 = 1 April 2026 to 31 March 2027.

Why the offset exists

You can only "assess" income that has already been fully earned. The FY ends on 31 March; the next day (1 April), the assessment process begins. The Income Tax portal opens for ITR filing typically by 1 May or 1 June of the AY.

So the AY is always exactly one year after the FY:

The simple rule

Rule of thumb: When you file ITR in 2026, you are filing for FY 2025-26 (income earned April 2025 - March 2026), and the AY is 2026-27 (the year you are filing in).

Whenever the Income Tax portal asks you which year to file for, it asks for AY. Choose AY 2026-27 if your income is from FY 2025-26.

Where the confusion shows up

The confusion bites in three common places:

Cross-checks while filing

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Frequently Asked Questions

Common reader questions on this topic. Email us if we missed yours.

Is Financial Year the same as Calendar Year?
No. India's FY runs from 1 April to 31 March. Calendar year is January to December. India follows FY for tax purposes; some countries (e.g., USA) use the calendar year.
Why is FY different from AY?
FY is when income is earned. AY is when income is assessed and ITR is filed. The 1-year gap exists because you can only file taxes after the FY ends.
When does FY 2025-26 end?
31 March 2026. After that date, the AY 2026-27 begins (April 2026).
What is the ITR due date for FY 2025-26?
31 July 2026 for individuals/HUFs not requiring audit. 31 October 2026 for audit cases. Belated return: 31 December 2026 with late fee.
Do tax slabs change every year?
They can, via the Union Budget. Slab changes announced in Budget 2026 (Feb 2026) apply from 1 April 2026 (FY 2026-27 / AY 2027-28).

Sources & References

Primary sources used to write and fact-check this guide. Updated when official notifications change.

Last reviewed by the AboutAll.in editorial team in May 2026. See our methodology for the full research process.