Financial Year Meaning?
A financial year (FY) is a 12-month period used by organizations and governments for accounting, taxation, and financial reporting purposes. It may or may not align with the calendar year (January–December).
In India, the financial year runs from 1st April to 31st March of the following year. For example, FY 2025–26 covers the period from April 1, 2025, to March 31, 2026.
In simple terms, a financial year is the official period for tracking income, expenses, taxes, and financial performance.
Example of Financial Year
If an employee earns income between April 2025 and March 2026, it is recorded under FY 2025–26, and taxes are calculated accordingly.
Financial Year vs Assessment Year
| Aspect | Financial Year (FY) | Assessment Year (AY) |
|---|---|---|
| Definition | Year in which income is earned | Year in which income is assessed and taxed |
| Timing | Current earning period | Next financial year |
| Example | FY 2025–26 | AY 2026–27 |