Assessment Year vs Financial Year

What is the Difference Between Assessment Year and Financial Year?

What is Financial Year?

The financial year in India runs from April 1 to March 31, known as FY. The current FY began on April 1, 2023, and will end on March 31, 2024.

What is Assessment Year?

The assessment year (AY) is the period following the financial year (FY) when income is taxed and filed as an IT return. For example, for FY 2023-24, the AY for income tax filing is 2024-25. AY is abbreviated as AY and also known as the income tax assessment year.

Difference Between Assessment Year and Financial Year

The table below highlights key differences between the financial year and assessment year.

Financial Year (FY)

Assessment Year (AY)

Financial Year (FY)

The period when working professionals and senior citizens earn income from different sources

Income cannot be taxed during this period; only earned

FY falls before the AY when an individual earns income/revenue

Evaluation and taxation conducted during the AY are for the revenue earned during the FY

Assessment Year (AY)

The time during which the revenue earned is evaluated for tax return

Income earned during the FY is evaluated and the appropriate taxes filed during this period

AY always follows the FY and refers to the time when the tax return is filed

Income Tax Return Forms are used especially for the evaluation and taxation of income earned during the FY

Points to Note When Filing Tax Returns During the Assessment Year

Important considerations for evaluating and taxing income earned in the FY for the following AY.

1. Opt for online filing of tax returns:

2. Maintain transparency in the tax-      filing process

3. Make use of a tax return calculator

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