The aim of this study is to explore assessment literacy, to analyse the current assessment practices of teachers in Higher Education (HE) and to understand the need for alternative assessment practices in light of teachers’ reflections. The research employed incidental sampling to select (n=58) HE teachers from a single multidisciplinary university in Maharashtra State, India. A comprehensive literature review on assessment literacy provided the theoretical foundation, and a specialized assessment tool was developed to assess the teachers' assessment literacy level, perspectives, and practices in assessment. Data were collected through voluntary participation and analysed using quantitative and qualitative techniques. The findings revealed that the majority of HE teachers (79%) demonstrated a moderate level of assessment literacy, while 16% exhibited low levels and only 5% showed high levels. Additionally, a discrepancy was observed between the preferred assessment types of teachers and learners, with learners emphasizing active participation and real-world applications, while teachers leaned toward traditional evaluation methods. Participants were found to be literate only in specific aspects such as meaning, basic forms of assessments, and the purpose of educational assessments. Furthermore, teachers minimally acknowledge and have a lesser preference for alternative assessment methods, such as article analysis, team projects, case studies, and discussions. Overall findings indicate teachers' lack of knowledge about assessment practices that involve evaluating student performance, fostering collaboration, assessing higher-order thinking skills, and utilizing assessment as a tool for learning and improvement. This research confirms the need for training to enhance teachers' assessment literacy, promoting the adoption of alternative assessment practices in higher education to optimize student learning experiences.