Understanding Financial Year and Assessment Year : Supportive – File Taxes Like a Pro in 2025

Financial Year (FY)

• Refers to the year in which an individual earns income from various sources such as salary, business, or investments.
• The FY runs from April 1st to March 31st of the following year.
• For taxation purposes, income earned in FY 2024-25 must be reported and assessed in the subsequent AY.
• Tax-saving investments and deductions must be made within the same FY to be eligible for tax benefits.

Assessment Year (AY)

• The AY is the year in which the income earned during the preceding FY is evaluated and taxed.
• For instance, income earned during FY 2024-25 is assessed in AY 2025-26.
• Returns must be filed in the relevant AY to declare income and settle tax liabilities.
• Non-compliance or delayed filing in the correct AY can attract penalties and interest.

Understanding Financial Year and Assessment year

1. Key Differences and Practical Implications
   • Income is earned in the FY and reported in the AY.
   • Understanding the difference ensures accurate filing and helps taxpayers utilize deductions effectively.
   • Tax-saving strategies must align with the FY, while tax filing and compliance align with the AY.
   • Many taxpayers confuse FY and AY, leading to errors in return filing.
2. Common Misconceptions
   • Many assume AY and FY are interchangeable, leading to incorrect entries on tax forms.
   • AY is often mistakenly entered instead of FY while declaring income or calculating taxes.
3. Pro Tip: Always double-check the AY when filing returns to avoid mistakes. The AY is always one year ahead of the FY.

What is income tax.gov.in?

income tax.gov.in is the official e-filing portal of the Income Tax Department of India. It allows taxpayers to file income tax returns (ITR), pay taxes, track refunds, and access various tax-related services online.

Benefits of Using income tax.gov.in

• Free e-Filing: File returns without additional charges.
• Convenience: File from anywhere, anytime.
• Accuracy: Automated calculations and data validation.
• Quick Refunds: Faster processing of tax refunds.

Alternative Tax Filing Platforms in India

You can also file your returns through trusted third-party portals like:

• ClearTax
• IndiaFilings
• H&R Block
• TaxSpanner

Use Our Income Tax Calculator

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Disclaimer

This article is for informational purposes only. Please consult a tax professional for personalized advice based on your financial situation.