What is Assessment Year?
An assessment year (AY) is an accounting period used for calculating annual taxes. It is the year following the financial year for which assessments are made for tax liabilities. This period is governed by the Income Tax Act, 1961 and is important for any individual or business taxes they may need to pay.
What is Financial Year?
A financial year (FY) is a 12 month accounting period used for calculating financial performance and results. It is a period used by businesses and individuals to calculate income, losses, profits, and expenses that have occurred over the course of the year. Unlike the assessment year, the FY is not governed by the Income Tax Act, 1961.
What are the differences between the Assessment Year and Financial Year?
The main difference between the assessment year and financial year is that the assessment year is used to calculate tax liabilities while the financial year is used to calculate financial performance and results.
The assessment year is governed by the Income Tax Act, 1961, while the financial year is not. In addition, the assessment year is typically the year following the financial year, while the FY may span any 12 month period.
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FAQs
How does the assessment year affect individual taxpayers and businesses?
It affects individual taxpayers and businesses by allowing them to properly calculate their taxes. During the this year, they are able to assess and make any necessary changes to their filing status so that they can minimize their tax burden.
What is the Assessment Year in ITR filing?
The assessment year in ITR filing is the year for which the Income Tax Return (ITR) is being filed. This helps the taxpayers to file their ITR before the due date and to correctly calculate their taxes for the year.
Why does ITR form have an Assessment Year?
The assessment year in the ITR form helps the taxpayer to correctly calculate their taxes for the year. By having an assessment year, taxpayers can identify the current financial year as well as the assessment year for which the ITR is being filed. This helps in correctly calculating taxes and filing the correct ITR form.
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