Taxpayers always get confused between the financial year (FY) and assessment year (AY) for which they are filing ITR. These terms are widely used in the context of ITR filing, TDS Return filing, and payment of income tax. Hence it is important to understand the difference between Financial Year and Assessment Year.
What is the Financial Year (FY)?
In simple terms, the financial year is the year which begins on 1st April and ends on 31st March. It is the year in which income is earned by the taxpayer. FY is a term widely used in Form 16, Salary Payslips, Loan repayment documents, etc of a taxpayer.
What is Assessment Year (AY)?
Term Assessment year is widely used in the context of ITR filing and payment of income tax. AY is a year immediately following the financial year. The taxpayer needs to file ITR not in the year in which he/she earns the income but after the end of that year i.e, in the assessment year.
Difference between the Assessment Year (AY) and Financial Year (FY )
Let’s take an example to understand the difference between AY and FY better: Mr. Ajay is a fresher who started a job in a company on 7th July 2018 and has worked with the same company till 31st March 2019. In this case, Financial Year (FY) is 2018-19 for Ajay i.e, the year in which income is earned by him. And Assessment Year (AY) is 2019-20 i.e, the year in which Ajay will file his ITR.
|
Period |
Financial Year(FY) |
Corresponding Assessment Year(AY) |
|
1st April 2017- 31st March 2018 |
FY 2017-18 |
AY 2018-19 |
|
1st April 2018- 31st March 2019 |
FY 2018-19 |
AY 2019-20 |
|
1st April 2019- 31st March 2020 |
FY 2019-20 |
AY 2020-21 |
FAQs
FY 2018-19 ends on 31st March 2019. Hence return for FY 2018-19 can be filed only after 31st March 2019. Taxpayers can file their ITR from April 2019, once the income tax department enables the e-filing of ITR on the income tax e-filing portal. The due date for filing ITR for FY 2018-19 is 31st July/ 30th September 2019.
AY 2019-20 starts on 1st April 2019 and ends on 31st March 2020. AY 2019-20 means FY 2018-19 and ITR for AY 2019-20 will be filed on or before 31st July/ 30th September 2019 for income earned in FY 2018-19.
Generally, ITR filing starts in April month of Assessment Year. Income Tax department notifies the commencement of e-filing on its website under the News and Updates section.
