INCOME TAX · TAX-YEAR SELECTION
Financial year, assessment year and Tax Year: choose the right period
Start with the relevant income period and transaction dates. The applicable provisions and rates depend on the relevant period and, for some transactions, the date of the specific event or transfer. The date on which a return is filed does not, by itself, move the underlying income into a different period.
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Start with the period and transaction dates
A tax calculation should begin with dates, not a slab table. Under the Income-tax Act, 1961, income is grouped by financial year and ordinarily reported in the following assessment year. Income earned from 1 April 2025 to 31 March 2026 belongs to FY 2025–26 and is reported for AY 2026–27.
Understand the new Tax Year
The Income-tax Act, 2025 came into force on 1 April 2026 and uses the expression Tax Year. For a continuing source of income, income arising during FY 2026–27 falls within Tax Year 2026–27. Where a business or profession is newly set up, or a source of income begins during the financial year, section 3 prescribes a shorter Tax Year beginning on that date and ending on 31 March. Although both examples contain “2026–27”, AY 2026–27 under the earlier Act and Tax Year 2026–27 under the new Act describe different income periods. The surrounding label matters.
Keep earlier years separate
The Department’s transition FAQs explain that returns, revisions and updated returns for periods before 1 April 2026 continue under the 1961 Act after the new Act begins. Filing an AY 2026–27 return in July 2026 therefore does not move it into the 2025 Act. Historical calculations must also keep the Finance Act changes and effective dates that applied in that historical period.
Write a period note
Create a short period note before using any calculator: income start date, income end date, filing label, governing Act and residency assumption. For capital gains, also preserve each acquisition and transfer date because rate and holding-period changes can occur inside a financial year.
Use the matching rules
The website’s year selector is therefore a rule selector rather than a display preference. Use the period attached to the income, then read the scope shown with the result. If records span years, calculate and review each period separately.
Legal/source review: . Check the law and guidance for the relevant period before acting.
Publication, content edits and source review are separate records. A content update does not certify a legal review. Check current law, notifications and portal guidance for your relevant period before acting.