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An assessment year starts immediately after the fiscal year ends. During this period, tax authorities evaluate a taxpayer’s income to determine any existing tax liabilities. The income you earned throughout the financial year, classified under various categories, is assessed and taxed accordingly. Both the financial year and the assessment year commence on April 1st and conclude 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.
The financial year and the assessment year are distinctly different. The financial year is when an individual earns income, which is subject to taxation. The assessment year, on the other hand, follows the financial year and is when the income from the previous year is assessed, taxes are paid, and the Income Tax Return (ITR) is filed.
For instance, the financial year that starts on April 1st, 2022, and ends on March 31st, 2023, is referred to as Financial Year 2022-23. Once this financial year concludes, the assessment year begins. Therefore, Assessment Year 2023-24 would correspond to Financial Year 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.