TheTaxHeaven Dictionary - Know the meaning of tax

Previous Year (P.Y.)

The income you earn this year is taxable in the next year according to the Income Tax law. The year you earn it is called the previous year. 

In simpler terms, the current financial year is the previous year. This financial year begins on April 1st and ends on March 31st of the following year. 

For example, if you earned salary income from April 1, 2017, to March 31, 2018, the previous year would be 2017-18. 

All taxpayers must use the financial year (April 1 to March 31) as the previous year for all income types. If you're just starting in a business or job, your first previous year will be less than 12 months. However, from then on, your previous year will always be your financial year. 

Remember, your previous year can never be longer than 12 months. 

What's the difference between the Financial Year and Assessment Year? 

The Financial Year is the year you're filing your return for, which runs from April 1 to March 31. The Assessment Year is always the year after. If you're filing for F.Y. 2016-17, for instance, the assessment year would be 2017-18.