What Is Tax Year in New Income-tax Act? Tax Year vs Assessment Year

What is tax year in the new Income-tax Act? It is the 12-month period from 1 April to 31 March in which income is earned, defined in section 3 of the Income-tax Act, 2025, and it replaces the old pair of “previous year” and “assessment year” from 1 April 2026. Income earned from 1 April 2026 to 31 March 2027 is income of tax year 2026-27, and its return will be filed in 2027. For a business or income source started during the year, the first tax year runs from the start date to the following 31 March.

What is tax year in the new Income-tax Act, in plain words

Under the Income-tax Act, 1961, one period had two names. Income earned from April 2025 to March 2026 belonged to “previous year 2025-26” and was assessed in “assessment year 2026-27”, and people constantly mixed the two up.

The Income-tax Act, 2025, in force from 1 April 2026, uses one label: the year in which you earn the income. You earn, report and are assessed for tax year 2026-27. Filing dates have not moved; only the name is new.

Knowing what is tax year in the new Income-tax Act is part of the wider Income-tax Act 2025 key changes, which also renumbered sections and forms.

Tax year vs assessment year vs financial year

The easy rule: the label is the year of earning, not the year after. In any document under the new Act, write “tax year 2026-27”, not “AY 2027-28”.

The first tax year for a new business or income source

Where a business or profession is set up, or a new source of income comes into existence, during a year, the first tax year begins on that date and ends on the following 31 March. After that, each tax year is the normal 1 April to 31 March.

Example: Farhan opens a mobile repair shop in Lucknow on 1 August 2026. His first tax year is 1 August 2026 to 31 March 2027. From 1 April 2027 his tax years follow the usual cycle. His salary from a job he held until July 2026 is still income of tax year 2026-27, reported in the same return.

What the tax year means for your ITR and other deadlines

1. Return due dates. For tax year 2026-27, returns are filed in 2027: 31 July for individuals without business income, 31 August for business and professional taxpayers whose accounts are not audited, and 31 October for audit cases, under section 263 as amended by the Finance Act, 2026.
2. Belated return. Up to nine months from the end of the tax year, that is 31 December, or before assessment is completed, whichever is earlier.
3. Revised return. Up to 12 months from the end of the tax year, with a fee if filed after the first nine months.
4. Updated return. Within 48 months from the end of the year following the tax year, with additional tax of 25% to 70%.
5. Advance tax. Paid during the tax year itself: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March, where tax due is ₹10,000 or more.
6. TDS certificates. Your employer’s Form 130 and your Form 168 statement are issued tax year-wise.

Example: Shalini, a nurse in Indore, filed in July 2026 for “assessment year 2026-27” under the old Act, using Form 16. In July 2027 she will file for “tax year 2026-27” using Form 130. Same job, same timing, new label.

Tax year confusions to avoid

• Reading “tax year 2026-27” as the year of filing. It is the year of earning. Filing happens in 2027.
• Mixing old and new labels in one letter. A notice for an old year will use assessment year language and old section numbers. A reply should follow the notice’s own year and sections.
• Assuming new rates came with the label. Slabs were carried over; see new vs old tax regime 2026-27.

When in doubt about which year a payment or notice belongs to, ask a chartered accountant.

Frequently asked questions

What is tax year in new Income-tax Act?

Tax year is the financial year from 1 April to 31 March in which income is earned, under section 3 of the Income-tax Act, 2025. It replaces “previous year” and “assessment year” from 1 April 2026. Income earned from April 2026 to March 2027 is tax year 2026-27.

Tax year 2026-27 means which assessment year?

Under the old system, income of 2026-27 would have been assessment year 2027-28. Under the new Act it is simply tax year 2026-27, and the return is filed in 2027.

Which year should I select while filing ITR in 2027?

For income earned between 1 April 2026 and 31 March 2027, select tax year 2026-27. Check the label on the e-filing portal carefully, because returns for older years still use assessment year language.

Has the ITR due date changed because of the tax year?

No, the tax year did not move the dates. Individuals without business income still file by 31 July. The Finance Act, 2026 separately gave non-audit business and professional taxpayers until 31 August.

Quick quiz

Now that you know what is tax year in the new Income-tax Act, learn the rest: New Income-tax Act 2025 and GST Basics certificate course (a certificate of completion, not a professional qualification).

Sources

• Income-tax Act, 2025: s.3 (tax year), s.263 (return of income: due dates, belated, revised and updated returns)
• Income-tax Act, 1961: “previous year” and “assessment year” (repealed from 1 April 2026, subject to saving provisions)
• Finance Act, 2026 (due date of 31 August for non-audit business taxpayers; revised return window)
• Income-tax Rules, 2026 (Form 130, Form 168)

This page is for education and general information, not tax or legal advice for a specific case. Consult a chartered accountant for your own return. Law as on 31 October 2026.