In Indian tax terminology, the Previous Year refers to the financial year in which you actually earned your income — for instance, income earned between April 2025 and March 2026 falls in the Previous Year 2025-26. The Assessment Year is the following financial year, during which that income is formally assessed, and your tax return for it is filed and processed — in this example, Assessment Year 2026-27.
This distinction often confuses first-time filers, since ITR forms and many official documents refer to the Assessment Year rather than the year you actually earned the income, which can feel counter-intuitive at first. A simple way to remember it: you earn your income in the Previous Year, and you file and get assessed for it in the following Assessment Year.
You'll see both terms used throughout ITR forms, Form 16, and other tax documents, so getting comfortable with the distinction makes the whole filing process much less confusing.