What is a Financial Year?
The financial year is the calendar year in which you received your money. It begins on April 1st of each calendar year and ends on March 31st of the next calendar year. The word "financial year" is sometimes abbreviated as "F.Y." An assessee must measure and plan taxes for the fiscal year, but the income tax return must be filed the next year or Assessment Year.
For instance,
- The income earned in the present Financial Year (FY) 2022-23 is the income earned from April 1, 2022, to March 31, 2023.
- Any money earned by you from April 1, 2022, to March 31, 2023, is simply referred to as income earned in Financial Year (FY) 2022-23.
What is an Assessment Year?
The assessment year is the period (from April 1 to March 31) during which you are taxed on the money you receive in a given financial year. In the relevant assessment year, you must file your income tax return. The year immediately after the Financial Year is known as the Assessment Year.
For instance, if you're looking for a unique way to express yourself.
- In Assessment Year 2023-24, income gained in the current Financial Year 2022-23 (i.e. from April 1, 2022, to March 31, 2023) will be taxable (i.e. from 1st April 2023 to 31st March 2024).
- In Assessment Year 2023-24, income received in Financial Year 2022-23 (i.e. from April 1, 2022, to March 31, 2023) will be taxable (i.e. from 1st April 2023 to 31st March 2024).
The Indian Financial Year
In India, the fiscal year starts on April 1 and ends on March 31. AY 2023-24 will be the review year for FY 2022-23. In certain circ*mstances, the financial year may vary from the previous year.
Assessment and Financial Year in India for the Recent Years
Period | Financial Year | Previous Year | Assessment Year |
1 April 2018 to 31st March 2019 | 2018-19 | 2018-19 | 2019-20 |
1 April 2019 to 31st March 2020 | 2019-20 | 2019-20 | 2020-21 |
1 April 2020 to 31st March 2021 | 2020-21 | 2020-21 | 2021-22 |
1 April 2021 to 31st March 2022 | 2021-22 | 2021-22 | 2022-23 |
1 April 2022 to 31st March 2023 | 2022-23 | 2022-23 | 2023-24 |
Difference Between AY and FY
A person's financial year is the year in which he or she receives money for tax purposes. The assessment year is the year after the financial year in which the prior year's revenue is assessed, tax is collected, and the ITR is filed.
For example, the financial year beginning on April 1, 2022, and ending on March 31, 2023, is known as Financial Year 2022-23. The assessment year starts after the financial year ends, so AY 2023-24 will be the assessment year for F.Y. 2022-23.
| You May Also Be Interested to Know | |
| Why is it Important to File Tax Returns? | How To File ITR With Multiple Form 16 |
| How to File ITR for Freelancer | Penalties for Not Filing Income Tax Returns |
| Income Tax Exemptions for Salaried Individuals | Tax Saving: Deductions Under Section 80C |
Important Differences Between AY and FY
Financial Year | Assessment Year |
The financial year is the time period where income is earned. | The assessment year that follows is the financial year and the period in which tax returns are filed. |
The financial year is when salaried professionals and senior citizens earn their money. | While AY is the time when the income that was earned in the financial year gets evaluated. |
Taxation and evaluation are carried out in the AY for the income that has been earned in the financial year. | Income Tax Return Forms are specialised forms for the evaluation and taxation of FY income. |
Income is always earned in the period known as the financial year it cannot be taxed prior to being earned. | After money has been earned by an individual it will be evaluated for the purpose of taxation in the latter, that is the AY. |
Why does ITR form have an Assessment Year?
Since the revenue for any financial year is calculated and taxed in the next year, the evaluation year and income tax forms include an assessment year. It is not possible to tax income until it is paid. Adverse circ*mstances may arise at any time during the year, whether at the start, centre, or end. As a result, when filing income tax returns, it is now necessary to pick the Assessment year.
