Difference between Assessment year and Financial year IN ITR
Avoid confusion between AY and FY
The phrases Financial Year (FY) and Assessment Year (AY) are two extremely important terms that taxpayers should be familiar with in order to file their tax returns. These two terms, financial year and assessment year, are frequently used by financial planners and chartered accountants when filing income tax returns (ITR) for their clients. Here is a look at the difference between financial year and assessment year.
What is ITR?
An individual submits an ITR to the Income Tax Department of India to file information about his income and taxes due/paid during the previous year. The information in an ITR must be valid for the fiscal year beginning on April 1 and ending on March 31 of the following year.
What is a financial year (FY)
In India, the Income Tax Department (I-T) levies taxes on your earnings once a year for a year. This one-year period in India begins on April 1 and concludes on March 31 of the following year. The term "financial year" or "fiscal year" refers to this time period, the year in which you have earned the income. So you will be filing ITR for 2021-22, the deadline for filing is July 31, 2022 (unless extended by the government).
What is an Assessment year (AY)
In India, people file their ITR the following year after the financial year ends. An assessment year is the name given to this time period. An assessment year is the period during which your prior year's income is assessed for ITR filing reasons. An assessment year begins on April 1 and concludes on March 31 of the following year. So you will be filing ITR for AY 2022-23.
Difference between AY and FY
The year or time period in which money is earned is referred to as the financial year. The assessment year follows the financial year, and it is at this time that tax returns are filed. Simply put, a Financial Year is a year in which business people, salaried professionals, and elderly citizens make money and pay taxes, and the next year, AY, being the time when the previously acquired revenue is evaluated and is assessed by the tax department.