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An assessment year begins immediately following the fiscal year. The assessment year assesses a taxpayer’s income and determines whether or not a tax liability exists. Throughout the year, the money that you generated during the financial year under several types of income is taxed and assessed. Both financial year and assessment year begin on April 1st and finish on March 31st.
Financial period starts from the 1st April to 31st March every year. This is the period in which an individual earns his income. Your income is also taxed on the basis of the financial year rather than the calendar year.
There is a clear difference between the financial year and the assessment year. A financial year is a year in which a person makes money for tax purposes. The assessment year is the year after the financial year in which the previous year’s income is assessed, tax is paid, and the ITR is submitted.
For example, the financial year beginning on April 1st, 2022, and ending on March 31st, 2023 is known as Financial Year 2022-23. The assessment year begins after the financial year finishes; therefore, AY 2023-24 would be the assessment year for FY 2022-23.
Here are the certain key pointers that are to be kept in the mind while filing the tax in an assessment year:
Assessment year starts after the financial year ends. The income earned in financial year is assessed in financial year.
The previous year is the year in which an individual earn their income.
Income earned in FY 2021-22 will be taxed in AY 2022-23. And, Income earned in the current Financial Year (FY) 2022-23 will be taxed in Assessment Year (AY) 2023-24.
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