What is Assessment Year ?
Assessment year means period in which income earned during financial year is assessed and taxed. Assessment year begins when financial year ends.For example for financial year 2022-23 the assessment year is 2023-24.
Further, A.Y. starts from 1st april and ends on 31st march. Income tax return is filed in a.y., which begins after end of the financial year.
Moreover, the taxpayer calculates the tax liability in the a.y. and pays it to the government on or before the specified date.
In brief, the year immediately after the financial year is known as assessment year.
Example of recent assessment year
- Income earned in financial year 2022-23(i.e. 1st april 2022 to 31st march 2023) is taxed in A.Y. 2023-24 (1st april 2023 to 31st march 2024).
- Income earned in in financial year 2021-22 (i.e. 1st april 2021 to 31st march 2022) is taxed in A.Y. 2022-23 (1st april 2022 to 31st march 2023).
- Income earned in in financial year 2020-21 (i.e. 1st april 2020 to 31st march 2021) is taxed in A.Y. 2021-22 (1st april 2021 to 31st march 2022) etc.
What is Financial Year?
Financial Year is a calendar year, in which you earn income. Financial year is begins with 1st april and ends on 31st march.
Further , Financial year is period of twelve month in which company ,individual and other taxpayers prepare their books of accounts. It is also known as fiscal year.
Also, in financial year company ,organizations or other uses to calculate how much profit it has earned and how much owed.
Now we will discuss difference between assessment year and financial year
| Financial Year (F.Y.) | Assessment Year (A.Y.) |
| Financial year is a period in which the taxpayer earns income. | Assessment year is following the F.Y. in which the income is taxed . |
| Further, F.Y. is a calendar year in which salaried and other assessee earns money. | Whereas A.Y. begins after end of the financial year in which the taxpayer calculates their tax liability and filed return of income on or before due date . |
| For instance, 1st april 2022 to 31st march 23 is financial year. | Assessment year for F.Y. 2022-23 is 2023-24 i.e. 1st april 2023 to 31st march 2024. |
