Difference Between Assessment Year (AY) and Financial Year (FY)
Many taxpayers are confused between the Financial Year (FY) and the Assessment Year (AY). They often tend to treat them as the same, which leads to making mistakes when they file their income tax returns.
What is a Financial Year?
A Financial Year (FY) is the 12 month period between 1 April and 31 March – the accounting year in which you earn an income.
What is the Assessment Year?
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. For instance, for FY 2023-24, the assessment year is AY 2024-25.
AY and FY for Recent Years
Period | Financial Year | Assessment Year |
1 April 2024 to 31 March 2025 | 2024-25 | 2025-26 |
1 April 2023 to 31 March 2024 | 2023-24 | 2024-25 |
1 April 2022 to 31 March 2023 | 2022-23 | 2023-24 |
1 April 2021 to 31 March 2022 | 2021-22 | 2022-23 |
1 April 2020 to 31 March 2021 | 2020-21 | 2021-22 |
1 April 2019 to 31 March 2020 | 2019-20 | 2020-21 |
1 April 2018 to 31 March 2019 | 2018-19 | 2019-20 |
What is the Difference Between AY and FY?
From an income tax perspective, FY is the year in which you earn an income. AY is the year following the financial year in which you have to evaluate the previous year’s income and pay taxes on it.
For instance, if your financial year is from 1 April 2023 to 31 March 2024, then it is known as FY 2023-24. The assessment year for the money earned during this period would begin after the financial year ends – that is, from 1 April 2024 to 31 March 2025. Hence, the assessment year would be AY 2024-25.
Why Does an ITR Form have AY?
Since income for any particular financial year is evaluated and taxed in the assessment year, income tax return forms have an assessment year (AY). As the income earned in a financial year cannot be taxed before it is earned, so it is taxed in the following year.
Scenarios like loss of job, job change, new investments etc., can come up in the middle or end of the FY. Also, the income earned in a financial year cannot be exactly known before the end of the financial year. This is why the assessment can start only after the financial year ends. Hence, taxpayers have to select AY while filing their income tax returns.
What is the Financial Year and Assessment Year called in Hindi?
The financial year (FY) in Hindi is called वित्तीय वर्ष and assessment year (AY) in Hindi is called निर्धारण वर्ष.
Related Articles
Calculate taxes- Income Tax Calculator – FY 2023-2024, AY 2024-2025
Income Tax Slabs for FY 2023-24 & AY 2024-25
Income Tax in India : Basics, slabs and E-filing Process 2024
New Income Tax Portal – Intro & Key Features of the e-Filing Portal
Frequently Asked Questions
Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.
Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.
CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.
Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.
Cleartax is a product by Defmacro Software Pvt. Ltd.
Company PolicyTerms of use
ISO 27001
Data Center
SSL Certified Site
128-bit encryption