There is often confusion among taxpayers regarding the distinction between the Financial Year (FY) and the Assessment Year (AY). This misunderstanding can result in errors when filing income tax returns. It is important for taxpayers to understand the difference between these two terms in order to accurately report their financial information to the tax authorities.
FINANCIAL YEAR
A financial year (FY) is a 12-month period that runs from April 1st to March 31st. It is the designated accounting year during which you generate income or accounts are maintained.
ASSESSMENT YEAR
The assessment year (AY) follows the financial year (FY) and is the period during which the income earned in the FY is evaluated and taxed. Both the FY and AY begin on April 1st and conclude on March 31st. For example, for the FY 2023-24, the corresponding assessment year is AY 2024-25
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