Financial Year and Assessment Year: We must have heard about Financial Year and Assessment Year many times. Many times we get confused between these two words. In such a situation, we give wrong information while filing ITR. Let us know through this article that what is the biggest difference between these two years?
This month is the last date to file ITR. The government has fixed July 31, 2023 as the last date for filing ITR. If you make any minor mistake while filing the return then your return will become invalid. Many times we get confused between the financial year and assessment year. In such a situation, let us know what is the difference between these two?
What is financial year?
Any period of a year in which you earn is called a financial year. The budget presented by the government is also of one financial year. The financial year begins on 1 April and ends on 31 March. In this way you can understand that a new financial year has started from 1st April 2023 which will end on 31st March 2024.
Let us tell you that apart from advance tax, TDS is paid in the financial year. Both these taxes are based on the estimated calculation of income. You get to know about the amount of tax you will pay in a year through the assessment year.
What is assessment year?
Whenever a financial year ends, the assessment year starts immediately after that. This is the year when you assess your earnings. You pay tax only after the tax has been assessed. If the financial year of 2022-23 has ended on 1 March 2023, then its assessment year has started from 1 April 2023.
How much you earned in a financial year and how much tax you will have to pay on it is decided through the assessment year. You will file ITR of the total income of FY 2022-23 on the last of this month, 31st July 2023. The tax slabs for the assessment year will remain the same as applicable for the financial year.
You only have to keep in mind that the financial year is written in short form as FY and the assessment year is written as AY.
