What is Assessment Year (A.Y) in Income Tax ?
We all come across the words previous year, financial year, and assessment year in our syllabus and also during the time of filing income tax returns. For someone who is not from finance background finds these words really difficult but before giving up lets understand it in the logical way
The period in which income is earned is known as financial year but the income tax returns are filed and taxes are paid in the next year after the end of the financial year. This year following the financial year in which income is assessed to tax is called assessment year.
Financial Year in India starts from 1st April and ends on 31st March every year , Financial year is also called as previous year in income tax as it is the year which is previous to the Assessment Year
Financial Year is usually denoted as F.Y and Assessment Year as A.Y
The year in which the assessment and filing of the assessee’s income is done is assessment year.It is a period of 12 months starting from April 1st and ending on 31st March.
Date wise, both FY and AY are from April 1st to next year’s March 31st but it is the activity that you do and refer to in these 12 months that help you refer to them as financial year and assessment year
Let us see some example for this
Previous Year (PY) >>>>>>>>>> Financial Year (FY) >>> Assessment Year (AY)
1st April 2008 – March 31st 2009 >>>> FY 08-09 >>>>>>> AY 09-10
1st April 2009 – March 31st 2010 >>>> FY 09-10 >>>>>>> AY 2010-11
1st April 2007 – March 31st 2008 >>>> FY 07-08 >>>>>>> AY 08-09
So from the above example we can conclude that Financial Year is the year of earning income and Assessment year is the year in which all the taxes are paid and returns are filed
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