Tax year vs assessment year

Understand the old labels

Under the Income-tax Act, 1961 framework, the previous year identifies the income-earning period and the assessment year is the following year. For income earned from 1 April 2025 to 31 March 2026, the return relates to assessment year 2026–27.

A return filed during calendar year 2026 is therefore not automatically a return for income earned during 2026–27. Keep the underlying income dates visible in working papers and correspondence.

Understand the new tax year

The Income Tax Department explains that the tax-year concept applies from 1 April 2026. Income earned from 1 April 2026 to 31 March 2027 is referred to as tax year 2026–27 under the Income-tax Act, 2025.

Tax year 2026–27 and assessment year 2026–27 do not describe the same income period. Avoid shortening either label to just 2026–27 when instructing a preparer or selecting a portal period.

Use a period mapping

Income period 1 April 2025–31 March 2026: previous year 2025–26, assessment year 2026–27, governed by the 1961 Act transition framework.

Income period 1 April 2026–31 March 2027: tax year 2026–27 under the 2025 Act.

For a newly started business or a special accounting situation, assess the relevant period from the applicable provision rather than assuming every record covers a full twelve months.

Keep older proceedings identifiable

The transition does not make historical returns, notices and proceedings disappear. The Department’s guidance explains the continuing application of the repealed Act to covered earlier-period proceedings under the savings provisions.

For example, a notice received after 1 April 2026 can still concern an earlier assessment year. Read the notice’s period and statutory reference rather than replacing it with a new tax-year label solely because of the date of receipt.

Label the working file clearly

• Start and end dates of the income period.
• Assessment year or tax year, written in full.
• Governing Act and relevant form version.
• Return or proceeding reference, where one exists.
• Payments and credits matched to the correct period.
• Any transition issue requiring a separate explanation.

Check forms and payment instructions

Use the portal workflow and notified form applicable to the period and purpose. Compare the selected year with the computation before submitting a return, response or payment. A valid transaction reference does not by itself establish that the correct period was selected.

If a payment or filing has been assigned incorrectly, retain the evidence and assess the available correction procedure. Do not duplicate the amount in a different year’s computation as an informal workaround.

Reconcile the handover

When sending records to an adviser, include the income dates alongside the year label. Keep separate folders for historical assessments and current tax-year compliance, with cross-references where an adjustment affects more than one period.

Kosha.Services can help reconcile the period mapping, forms and supporting records during the transition. Provide prior returns, notices, payment references and the current books so the work can be assigned to the right statutory period.