Many people get confused about Financial Year and Assessment Year. If you are filing ITR for the first time then you must know the difference between them.
When we talk about income tax, the words Financial Year and Assessment Year are definitely used somewhere. If you have been filing ITR, then you may know about it. Financial Year is called Finance Year in Hindi and is written as FY in short. At the same time, Assessment Year is called Assessment Year and is written as AY in short. But if you are filing ITR for the first time, then you must know the difference between them. Know about this here-
What is financial year?
The period of the year in which you earn is called the financial year. The budget presented by the government is also presented for the financial year. Any financial year starts from 1 April and ends on 31 March. Accordingly, the period from 1 April 2024 to 31 March 2025 will be called the financial year 2024-25. Advance Tax and TDS are paid in the financial year itself. Since both these taxes are based on the estimated calculation of your potential income, they can be less or more than the actual liability. What is the actual tax liability, it is known only in the assessment year.
What is assessment year?
The assessment year starts immediately after the financial year ends. Assessment year means the year where you assess the tax on the income of the financial year and file ITR accordingly. For example, the financial year till 2023-24 was from 1 April 2023 to 31 March 2024. The assessment year for this financial year has started from 1 April 2024.
How much tax is payable on the total income of the previous financial year will be decided in the assessment year and income tax return will be filed accordingly. The last date for which is 31 July 2024. That is, on 31 July 2024, you will file ITR on the total income of FY 2023-24. As per the rules, it is mandatory to file and submit the return within one year of the end of the financial year. Tax rules and tax slab rates for the assessment year will remain the same as they were for that financial year.
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