#Previousyear #assessmentyear #financialyear
Many taxpayers confuse between the Financial Year (FY) and Assessment Year (AY). They often tend to treat them as the same, which leads to making mistakes when they file their income tax returns. A Financial Year (FY) is the period between 1 April and 31 March – the year in which you earn an income. The assessment year (AY) is the year that comes after the FY. This is the time in which the income earned during FY is assessed and taxed. Both FY and AY start on 1 April and end on 31 March.
The year in which your income is assessed and taxed by the income tax department is called the Assessment Year (AY). In other words, AY is the succeeding year of the financial year. For instance, if your financial year is 2020-21, the assessment year will be 2021-22
The Balance Sheet and Income statement of companies across the Globe are usually prepared for a period of 1 year. However, the date from which this period starts varies from country to country.
In India, this 1 year period starts from 1st April and ends on 31st March. This period in which the income is earned is known as the Financial Year or Fiscal Year. The income tax returns are filed and taxes for a company are usually paid in the next year after the end of the Financial Year. This next year in which the income is assessed to tax is called as the Assessment Year.
