Difference Between Financial Year (FY) and Assessment Year (AY)
Many taxpayers are confused between the Financial Year (FY) and the Assessment Year (AY), if they understand the difference between the financial year and the assessment year, they will not miss the deadline for paying tax returns. Financial Year and Assessment Year used to determine the taxation of an individual or entity's income. Both are important terms in income tax and financial planning.
What is a Financial Year?
A Financial Year is the 12 month period between 1st April to 31st March – where income is earned. It starts on April 1st of each year and ends on March 31st of the next year. It is also the period during where companies prepare their annual financial statements, including profit and loss statements, balance sheets, and cash flow statements. The financial year is important for a business and an individual since it is the period during which income is earned and financial transactions carried out.
Financial Year 2022-23: Any money earned by you from April 1st, 2022 to March 31st, 2023, is simply referred to as income earned in Financial Year (FY) 2022-23.
What is an Assessment Year?
The year starts after the Financial Year is known as the Assessment Year. The assessment year is the period from April 1st to March 31st during which you are taxed on the money you receive in a given financial year.
Assessment Year 2023-24: Income gained in the Financial Year (2022-23) From April 1st, 2022 to March 31st, 2023 will be taxable From 1st April 2023 to 31st March 2024.
Assessment and Financial Year in India for the Recent Years
| Period |
Financial Year |
Assessment Year |
| 1 April 2024 to 31st March 2025 |
2024-25 |
2025-26 |
| 1 April 2023 to 31st March 2024 |
2023-24 |
2024-25 |
| 1 April 2022 to 31st March 2023 |
2022-23 |
2023-24 |
| 1 April 2021 to 31st March 2022 |
2021-22 |
2022-23 |
| 1 April 2020 to 31st March 2021 |
2020-21 |
2021-22 |
| 1 April 2019 to 31st March 2020 |
2019-20 |
2020-21 |
Why is the Assessment Year important for tax filing?
The assessment year is important because it is the period when taxpayers filing Income Tax Return (ITR) and pay any outstanding taxes for the income earned in the previous financial year.
Income Tax E-filing Due Date (ITR Return)
The due date for income tax return filing is an important date for taxpayers to keep in mind. As the deadline for filing taxes for the year approaches, taxpayers should make sure to take note of the due date for income tax e-filing in order to ensure that their taxes are filed on time. The due date for filling income tax return is July 31 every financial year. With the proper planning and preparation, it is possible to successfully file taxes before the deadline.
