In the Indian income tax system, the term Previous Year (PY) refers to the financial year in which an individual or business earns income. This is the 12-month period starting from 1st April and ending on 31st March of the following year. The income earned during the Previous Year is assessed and taxed in the Assessment Year (AY) that follows.
For example, if you earned income between 1st April 2024 and 31st March 2025, that period is your Previous Year 2024–25, and the Assessment Year for that income would be 2025–26.
Understanding the concept of the Previous Year is essential for all types of income tax compliance—whether you're a salaried employee, self-employed professional, or running a business. It determines the time frame for maintaining books of accounts, filing income tax returns, and reporting taxable income.
In practical terms, when you're filing your ITR or calculating advance tax payments, all income details must relate to the relevant Previous Year. It’s also important for TDS (Tax Deducted at Source) calculations and documentation during audits or when applying for loans and government registrations.
For expert support with income tax compliance for your previous year’s earnings, visit FinTax24’s Income Tax Solutions.
By keeping track of your Previous Year correctly, you ensure smooth, timely, and error-free tax filing, helping you stay compliant with Indian tax regulations.