Financial year and assessment year are often taken as interchangeable. However, there is a difference between the two. Also, for taxpayers who know that they are different, they often get confused between the two. So, let’s get this issue solved. In this blog, we shall discuss what financial year and assessment year are and the difference between the two.
What is Financial Year?
The financial year is the year in which an individual earns income. The financial year in India starts from April 1 and ends on March 31. The financial year is also called a fiscal year. The financial year is also denoted as FY and is called वित्तीय वर्ष in Hindi. The current financial year is 2018-19 and the upcoming is 2019-2020.
What is Assessment Year?
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The assessment year is the year in which the earned income is assessed. Like a financial year, the assessment year in India starts from April 1 and ends on March 31. The assessment year can also be explained as the year in which the income tax returns are filed for the earned in the previous financial year. The assessment year is denoted as AY and is called निर्धारण वर्ष in Hindi. The current assessment year is 2018-19 and the upcoming is 2019-2020.
What is AY and FY for the recent years?
The FY and AY for the recent years are:
|April 1, 2016 to March 31, 2017||2016-17||2017-18|
|April 1, 2017 to March 31, 2018||2017-18||2018-19|
|April 1, 2018 to March 31, 2019||2018-19||2019-20|
Financial Year and Assessment Year
FY is the financial year and AY is the assessment year. FY is the year when the income is earned and the year in which the tax is paid for it is called AY. Since you cannot pay the taxes before the income is earned, you pay taxes for the FY in the following year always. You evaluate the earned income and pay the taxes for it in the following year.
For instance, if you FY is April 1, 2018, to March 31, 2019 (FY 2018-19), the Ay for it will begin from April 1, 2019, to March 31, 2020 – the year following FY.
What does an ITR have – AY or FY?
As conveyed earlier, you evaluate and pay tax in the AY, so the ITR has an AY. Income is earned by an individual in FY and it cannot be taxed before that. It is evaluated and taxes after the FY ends. Hence, AY is mentioned while filing income tax returns.