Income is taxable on the net income that is earned during the previous year (PY). It is assessed in the immediately succeeding financial year which is called an assessment year (AY). All assessees are required to follow a uniform PY.
AY means the period 12 months commencing on the first day of April. That means it’s the period from 1st April to 31st march.
PY means the financial year immediately preceding the AY.
Your income generated from 1st of April 2012 to 31st march 2013 will be assessed to tax in the period that starts from 1st of April 2013 to 31st March 2014. In this case the period that starts from 1st of April 2012 to 31st march 2013 is called PY and the period that starts from 1st April 2013 to 31st march 2014 is called AY.