Difference of Assessment year and Financial year
Financial year or financial year in India, may be a time counted in 12 months, from 1st April to 31st March, when an amount of cash is earned. As per the Government’s tax policy, the income of this point is taken into account to be taxable within the succeeding year, that’s called Assessment year. during this context, another important point should be told that both fiscal year and Assessment year are counted by 12 months, ranging from 1st April to 31st March. only a fiscal year ends, the annual income of a taxpayer earned during this time are often recorded and computed for tax evaluation within the coming Assessment year. Here, an example is shown for this:
The annual income of Mr XYZ within the fiscal year 2019-20 is filed in ITR and taxes are computed in Assessment year 2020-21.
Usually, the maturity of filing tax Returns for a fiscal year in India is 31st July/30th September of the Assessment year.
Tips to Handle Income during a fiscal year
Whether you’re a taxpayer or not, it’s an honest practice to take care in handling the cash that you’re earning.
Keep an organized record of accounts to notice the expenses. Review and rectify logically to save lots of your income.
Do logical investments for getting tax deductions and other benefits.
Preserve your income/expenses documents, like Form 16, payslips, bills, investment records, etc. and check them thoroughly to make sure its correctness.
Remain conscious of the govt tax policies. Take updates of tax rules and slab rates.
What Assessment year means?
In India, tax for a year’s income, that’s the annual net , is evaluated and charged within the next year called Assessment year, denoted as ‘AY’. Like fiscal year , the time when the cash is earned, Assessment year also begins from 1st April and ends in 31st March. We’re giving some examples below to form it clear how Assessment year and fiscal year differ from one another:
For internet income of a fiscal year , say 2017-18, its return filing and tax evaluation are wiped out the subsequent Assessment year 2018-19. For any financial computation or tax payment, knowledge on these two facts is most vital for a taxpayer in India.
Difference of Assessment year and fiscal year
| Financial Year | Assessment Year |
| 1. It is the time period when income is earned
2. It comes before AY 3. No income is evaluated or taxed during a running Financial year |
1. In this time period, return filing and taxes are charged on past year’s income
2. It comes after FY 3. Tax rules and slab rates of preceding FY is levied during a AY |
Importance of Assessment Year in ITR Filing
Since income of a fiscal year is recorded, evaluated and charged by Tax Department of India within the next Assessment year, these are the most points for a taxpayer to recollect while filing ITR:
ITR forms always use AY (Assessment year). confirm to not treat it as FY (Financial year).
Referring documents for ITR, such as, Form 26AS, Form 16A, Capital Gains Statements, TDS, should be from the right fiscal year (FY) and mentioned properly.
FY (Financial year) is usually utilized in every proofs submitted for ITR.
Once a fiscal year ends, then only its annual income is assessed and charged within the next Assessment year.