What is Assessment Year?
An Assessment Year (AY) is a term primarily used in the context of income tax systems, particularly in countries that follow a system of self-assessment. It is the year immediately following the Financial Year (FY) in which an individual or entity earns income. During the assessment year, taxpayers assess and declare their income for taxation purposes, calculate their tax liability, and file their income tax returns.
What is Financial Year?
A Financial Year (FY) is a 12-month period used for financial reporting and budgeting purposes by businesses, governments, and other organizations. It is not necessarily aligned with the calendar year and can start and end at any point during the year. The financial year is also known as the fiscal year in some regions. In India, this period runs from 1st April of one year to 31st March of the next. So, when someone mentions “FY 2024-25,” they’re referring to the financial year starting April 1, 2024, and ending March 31, 2025.
Recent Years in the Financial Year
- FY 2023-24: This is the current financial year, running from 1st April 2023 to 31st March 2024.
- FY 2024-25: This is the upcoming financial year, commencing on 1st April 2024 and concluding on 31st March 2025.
Table of Content
- Key Points About a Financial Year
- Why April 1st?
- Importance of Financial Year
- Significance of Financial Year
- Advantages and Disadvantages of Using Financial Years:
- What is Assessment Year?
- Difference Between Assessment Year (AY) and Financial Year(FY)
- How to Choose Your Financial Year End?
- FAQs Related to Financial Year
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