4 min read
Tax filing is a crucial process that needs to be carried out thoroughly and cautiously. Thanks to technology, you can easily file your income tax returns sitting in the comfort of your house. All you need to know is the vital terminologies associated with the process. For instance, the terms financial year and assessment year are of relevance here. This blog explains the meaning of these two terms and also highlights the critical differences between the two so that you can understand whether income earned during the financial year is taxed or the one earned during the assessment year.
But first, let us begin by understanding what these two periods imply in tax filing.
A financial year in India refers to the period starting from April 1 every year up to March 31 the following year. This is unlike the regular calendar year. During this time, money is received and is therefore also the income-earning period. The financial year is commonly known by its acronym FY. The current financial year began on 1 April 2023 and will end on 31 March 2024.
The simplest way to define an assessment year is to look at the period that follows the financial year. In other words, it is the duration during which the income earned during the FY is taxed and filed as an IT return. For instance, for the FY from 1 April 2023 – 31 March 2024, the Assessment Year when the income tax would be filed will be 2024-25. Assessment Year is popularly abbreviated as AY. It is also sometimes addressed as the income tax assessment year.
The prime difference between FY and AY is that a person earns money during the FY and files tax returns for that revenue earned during the AY. The table below elaborates on some of the other major differences between the financial year and the assessment year.
|Financial Year (FY)||Assessment Year (AY)|
|The period when working professionals and senior citizens earn income from different sources||The time during which the revenue earned is evaluated for tax return|
|Income cannot be taxed during this period; only earned||Income earned during the FY is evaluated and the appropriate taxes filed during this period|
|FY falls before the AY when an individual earns income/revenue||AY always follows the FY and refers to the time when the tax return is filed|
|Evaluation and taxation conducted during the AY are for the revenue earned during the FY||Income Tax Return Forms are used especially for the evaluation and taxation of income earned during the FY|
Here are some important things to remember during the evaluation of income earned during the FY and assessing it for taxation purposes during the AY the following year:
Always choose e-filing for tax returns during the assessment year period. This makes the tax filing process much simpler and more convenient for everyone, particularly senior citizens.
Make sure that you are as honest as possible about your tax returns in the past and the receipts received from the IT department after online tax filing. If the tax return filing process is honest and transparent, everything will be conducted smoothly with no hiccups on the way.
You can find one easily on www.paybima.com, which is completely free to use and accurate too. It would be able to easily generate the exact tax deductions that you can claim for the income that you earned during a particular financial year.
Here are a few examples of what is a financial year and assessment year to help you better understand the two for tax evaluation purposes:
|Period||Financial Year||Assessment Year|
|1 April 2022 – 31 March 2023||2023-24||2022-23|
|1 April 2021 – 31 March 2022||2022-23||2021-22|
|1 April 2020 – 31 March 2021||2021-22||2020-21|
The tax filing process can become much simpler and hassle-free for the taxpayer once the two terms – financial year and assessment year – are clear. This blog aimed to clearly explain the meaning of these two terms as well as elaborate on the key differences between the two.
For a simpler and smoother tax-filing experience, log on to paybima.com and get all the help that you need in the matter.
Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance, and Investment section. You can visit PayBima to Buy Insurance Online.
Every calendar year, the new financial year begins on 1 April and ends on 31 March of the next calendar year. For instance, this year, the financial year started on 1 April 2023 and would end on 31 March 2024.
Yes, the AY is 12 months starting on 1 April every year.
The AY is so called because it is the time during which the income earned during the previous FY is assessed or evaluated and it is determined whether or not the said income is taxable as per the Indian Taxation Law.
A fiscal year is the same as a financial year, beginning from the 1st of April every year to the 31st of March in the following year.
TDS refers to Tax Deducted at Source and aims at collecting tax from the exact source of income. The deductor is liable to deduct tax at source and remit it to the government’s account directly.
As per the Income Tax Law, the following 4 assessments are taken into consideration:
~Assessment Under Section 143(1) - also called Summary Assessment without calling the assessee
~Assessment Under Section 143(3) - also called Scrutiny Assessment
~Assessment Under Section 144 - also called Best Judgement Assessment
~Assessment Under Section 147 - also called Income Escaping Assessment
The April-March period happens to coincide with the Hindu New Year, which explains why the FY in India commences in April every year.
A fiscal year is known by several other names, such as financial year, annual accounting period, calendar year, accounting year, and twelve-month period.
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
An overview of LIC’s popular comprehensive insurance policy - Jeevan Saral - its benefits to the policyholder, and its special feature - the maturity calculator.
Everything you need to know about the YSR Pension Kanuka scheme, the eligibility requirements to apply, the benefits of the plan, and the different types.
Jeevan Saral Plan comes from the house of LIC, Life Insurance Corporation of India. Also, referred to as Plan 165, Jeevan Saral Policy is one.
LIC is one of the most trusted and reliable public sector insurance companies in India. The company has been serving customers with their varied insurance.
Unless you have planned well for your life after retirement, you may have to face a financial crunch in your old age. Let us take.
If you are willing to invest in market linked plans, there are two ways to do so. One is through single lump sum payment and.
FDs or Fixed Deposits are among the safest kinds of investments that anyone can rely on. FDs for senior citizens is the best option for.
HRA or House Rent Allowance is a part of a salary compensation offered by organizations to their employees above their basic salary. This post will.
India is one of the countries with the biggest number of banks and financial institutions in the world. One such progressive bank, the Karnataka bank,.
Calculators are used to calculate premiums, interest rates and other important aspects related to insurance and investments. Let us take a look at the FD.
Speak to our advisor
Corporate Office : Mahindra Insurance Brokers Ltd ( A Mahindra Group Company ) Sadhana House, Ground Floor, 570 P. B. Marg, Behind Mahindra Towers, Worli, Mumbai 400018.
Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).
Insurance is the subject matter of solicitation.
For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.
Copyright © 2023 Mahindra Insurance Brokers. All Right Reserved.