When dealing with taxes like deducting TDS, paying taxes, filing tax return etc., we often come across the terms Assessment Year (AY) and Financial Year (FY). It often creates confusion for newbies. Therefore it is important to understand the concept of AY and FY as well as their differences.
The year in which you earn your income is termed as Financial Year for tax purposes. It is also the year in which you pay tax on your income. A Financial year lasts from 1st April to 31st March.
Assessment Year is the year which immediately follows Financial Year. It is also the year in which you file your Income Tax Return for the taxes paid in the relevant Financial Year. It also lasts from 1st April to 31st March.
|AY and FY for recent years|
|Period||Financial Year||Assessment Year|
|1 April 2015 to 31 March 2016||2015-16||2016-17|
|1 April 2016 to 31 March 2017||2016-17||2017-18|
|1 April 2017 to 31 March 2018||2017-18||2018-19|
|1 April 2018 to 31 March 2019||2018-19||2019-20|
The table given below shows the key differences between AY and FY from the perspective of Income Tax laws.
|Table showing difference between AY and FY|
|Assessment Year||Financial Year|
|The year immediately succeeding Financial Year||The year immediately preceding Assessment Year|
|The year in which you file ITR||The year in which you pay Income Tax|
To understand the concept of FY and AY, let’s understand it with the help of an example.
If we take the example of Financial Year 2017-18 which lasted from 1st April 2017 to 31st March 2018, it’s relevant Assessment Year is AY 2018-19. It simply means that for income earned and taxes paid in the year 2017-18, a taxpayer is liable to file ITR in the year 2018-19.
In Hindi, a Financial Year is known as वित्तीय वर्ष and an Assessment Year is known as निर्धारण वर्ष.
Income earned in FY 2016-17 which ended on 31st March 2017 has to be assessed in the Assessment Year 2017-18. Therefore, you need to file Income Tax Return in the AY 2017-18 for income earned and taxes paid in FY 2016-17.
Please note that 31st March 2018 is the due date to file a belated and revised return for FY 2015-16 as well as FY 2016-17. Do not miss this opportunity.
Financial Year (FY) 2017-18 will end on 31st March 2018. The Income Tax Return filing due date for FY 2017-18 is 31st July 2018.
AY 2018-19 will begin on 1st April 2018. The Income Tax Return filing due date for FY 2017-18 is 31st July 2018.
Income Tax department notifies commencement of e-filing on its website under News and Updates section. For the current Financial 2017-18, tax return filing needs to be done in the immediately succeeding year.
Saving taxes and filing income tax return accurately becomes very easy when you have professional help. This is where we come into the picture. You can either use our intuitive tax filing platform to easily file your tax return or let our tax experts file it for you. We have a team of in-house tax experts who can accurately file your tax returns online while giving you maximum tax benefits.