ITR Tips: Do you know the difference between a Financial Year and an Assessment Year? know here...

When it comes to income tax, the terms Financial Year and Assessment Year are used somewhere. If you have been filing ITR, then you might be aware of this. The financial year is called 'Vitt Varsh' in Hindi and is written as FY in short. Whereas assessment year is called assessment year and is written in short as AY. But if you are filing ITR for the first time then you must know the difference between them. Know about this here-

What is the 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 on 1st April and ends on 31st March. Accordingly, the period from April 1, 2024, to March 31, 2025, will be called the financial year 2024-25. Advance Tax and TDS are paid in the financial year only. Since both of these taxes are based on an estimated calculation of your potential income, they may be more or less than the actual liability. The actual tax liability is known only in the assessment year.

What is the assessment year?

The assessment year starts immediately after the end of the financial year. Assessment year means the year where you assess tax on the income of the financial year and file ITR accordingly.   Like the financial year 2023-24 was from 1 April 2023 to 31 March 2024. The assessment year for this financial year has started from 1 April 2024. 

The amount of tax payable on the total income of the previous financial year will be decided in the assessment year and the income tax return will be filed accordingly. Whose last date is 31 July 2024. That means on July 31, 2024, you will file ITR on the total income of FY 2023-24. According to the rules, it is mandatory to file 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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