[ecis2016.org] Tax payers should have a clear understanding about the difference between a financial year and an assessment year to file taxes in India.
To file taxes in India, taxpayers must have a clear understanding of the difference between a financial year and an assessment year. This guide will help you learn that.
You are reading: Difference between financial year and assessment year
Read also : PPF: All about Public Provident Fund
What is a financial year?
The Income Tax (I-T) Department in India charges taxes on your income every year for a period of one year. However, the date from which this period starts varies from country-to-country. In India, this one-year period starts from April 1 of a year and ends on March 31 of the next year. This period is known as a financial year or fiscal year.
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What is an assessment year?
The Income Tax Return (ITR) in India is filed the next year after the end of the financial year. This period is known as an assessment year. An assessment year is basically the period in which your income for the previous year is assessed for ITR filing purposes. An assessment year also starts on April 1 and ends on March 31 of the next year.
Difference between FY and AY
A financial year is a one-year period when you earn your income while the assessment year is the following one-year period when this income is assessed and evaluated for I-T purposes. Hence, income tax forms invariably use the term assessment year (AY) and not FY.
As the income earned in a financial year cannot be evaluated and taxed in the same year due to many reasons, the I-T Department does so in the assessment year that follows the fiscal year.
Read also : Types of ITR: Which ITR form should you use?
Both, financial year, as well as assessment year, start on April 1 and end on March 31. An assessment year follows the financial year. For example, for FY 2021-22, the assessment year would be AY 2022-23.
If your financial year is from April 1, 2022 to March 31, 2023, it is known as FY 2022-23. The assessment year for the income earned during this period would begin after the financial year ends. So, the assessment year, in this case, would be April 1, 2023 to March 31, 2024 or AY 2023-24.
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FY and AY in recent years
| FY period | Financial year | AY period | Assessment year |
| April 1, 2022 to March 31, 2023 | 2022-23 | April 1, 2023 to March 31, 2024 | 2023-24 |
| April 1, 2021 to March 31, 2022 | 2021-22 | April 1, 2022 to March 31, 2023 | 2022-23 |
| April 1, 2020 to March 31, 2021 | 2020-21 | April 1, 2021 to March 31, 2022 | 2021-22 |
| April 1, 2019 to March 31, 2020 | 2019-20 | April 1, 2020 to March 31, 2021 | 2020-21 |
| April 1, 2018 to March 31, 2019 | 2018-19 | April 1, 2019 to March 31, 2020 | 2019-20 |
| April 1, 2017 to March 31, 2018 | 2017-18 | April 1, 2018 to March 31, 2019 | 2018-19 |
| April 1, 2016 to March 31, 2017 | 2016-17 | April 1, 2017 to March 31, 2018 | 2017-18 |
FAQs
What is a financial year?
For income accounting purposes, a financial year (FY) is the period between April 1 and March 31.
What is an assessment year?
An assessment year is the year that comes after the financial year.
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What do you call financial and assessment years in Hindi?
A financial year is known as वित्तीय वर्ष in Hindi, while an assessment year is called as निर्धारण वर्ष.
What is the difference between FY and AY?
FY is the period when your income is earned, while AY is the period when the income earned during the FY is assessed. So, an AY follows the FY.
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