The New Income Tax Bill 2025 was presented by the Finance Minister on February 13, 2025 to simplify the current income tax rules and regulations. The most talked-about change is the implementation of “tax year” and the removal of “assessment year.” In this blog, we’ll understand the meaning of tax year in detail and how it will simplify your tax filing in the future.
What is the tax year, previous year, and assessment year?
- Tax Year: The tax year is the 12-month period in which the income is earned and filed. It is from April 1 to March 31.
- Previous Year: The April to March, 12-month period is called the previous year (or financial year) in which the income is earned.
- Assessment Year: The assessment year is the year following the previous year in which tax is filed for the income earned. After the new income tax bill 2025, the assessment year will no longer be considered.
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In the Income Tax Act, 1961, there are two terms: a previous year (the year in which income is earned) and the assessment year (the year in which income is assessed and filed). In the New Income Tax Bill 2025, there is only one term left which is known as tax year.
Benefits of Tax Year
The implication of the tax year will remove the confusion among taxpayers for the different terms such as previous year and assessment year. This will also help in aligning the Indian tax system with other countries that follow the tax year. All the tax returns filing and deductions will have a higher clarity for individuals and businesses.
How Will Tax Year Be Different?
Here is how the tax year will be different from the financial/ previous year and assessment year:
| Pointers | Tax Year | Previous Year | Assessment Year |
|---|---|---|---|
| Meaning | 12-month period when income is earned and reported | 12-month period when income is earned | 12-month period when income is assessed and filed |
| Period | Tax Year 2025-26 (Income earned from April 1, 2025 to March 31, 2026) | April 1, 2024 to March 31, 2025 | April 1, 2025 to March 31, 2026 |
| Covered | New Income Tax Bill 2025 | Income Tax Act, 1961 | Income Tax Act, 1961 |
Conclusion
The introduction of “tax year” has simplified the tax filing for the investors but it should not be confused with any change in the ITR filing timeline. There will be no change in the filing period as the individual will continue to file ITR by July 31 following the tax year period. While easier taxation rules are your way, you can also kickstart your seamless investment journey by opening a free Demat Account with SMC Global Securities.
Author: All Content is verified by SMC Global Securities.
WHY SMC
- 20 Lac+ unique clients
- 33+ Years of Serving
- Advance Technical Analysis
- Free Demat Account
