Tax Year in Income Tax: Meaning, Example, Start and End Date, How is it Different from FY & AY

The upcoming Income Tax Bill 2025, which was introduced in the Parliament on February 13, seeks to simplify India's tax laws and simplify compliance for taxpayers. One of the key changes in the bill is the introduction of the "tax year," which replaces both the Financial Year (FY) and the Assessment Year (AY). In this article, we will learn about the "tax year" as outlined in the new Income Tax Bill 2025.

What is a Tax Year in Income Tax?

As per the Income-Tax Bill, 2025, the Tax Year is defined as follows:

• It is a 12-month period that begins on April 1st and ends on March 31st of the following year.
• For a newly established business or profession, the Tax Year starts from the date of the establishment.
• If a new source of income arises during the year, the Tax Year for that income begins from the date the income source comes into existence.

Comparison: Tax Year v/s Financial Year v/s Assessment Year

The comparison of tax year under the new Income Tax Bill, 2025 and Financial year and Assessment year is as follows:

Impact of the Change

The removal of the concept of financial year and assessment year simplifies the tax process, giving taxpayers a better overview and lesser confusion. It tends to simplify the operation of the tax authorities additionally by minimizing amounts of disparities and misinterpretations concerning assessment periods and the financial periods.

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