Assessment year
An assessment year is the time during which a person’s income is checked. This helps them to figure out how much income tax they are obliged to. The assessment year comes after the financial year, which runs from April 1st to March 31st of the next year.
Often people confuse the assessment year with the financial year. However, they are two different years, holding different significance and purposes.
You too are here to get your basics cleared about the assessment year?
If YES, let’s dive in!
Here, we will discuss:
Understanding Assessment Year Meaning
The assessment year (AY) runs from April 1st, 2019, to March 31st, 2020. During this time, the income from the previous year is taxed and evaluated for making your income tax return. Since you can’t be taxed on income before you make it, you will be taxed on it the following year, right after the end of the financial year. For instance, you will be taxed and assessed on your income from the financial year (1st April 2022 to 31st March 2023) as soon as it finishes, which will be from 1st April 2023 to 31st March.
Financial Year Vs Assessment Year
For income tax purposes, the year you make money is called the financial year (FY). The assessment year (AY) is the year after the financial year. This is when you have to figure out how much money you made the previous year and pay taxes on it.
Let us say that your fiscal year runs from April 1st, 2020, to March 31st, 2021. The name for this time is FY 2020-21. The tax year for the money made during this time would start after the financial year ends, on April 1st, 2021, and end on March 31st, 2022. So, the assessment year (AY) would be 2021–22.
Now that you know the difference between assessment year and financial year, let’s understand the importance of the assessment year in the next section!
Role of Assessment Year
When computing how much tax a person or business needs to pay, the assessment year is the most important period of time. It is a very important step that sets the stage for the whole tax cycle.
Needs for Filing
You are required by law to give a full account of your financial actions for the previous fiscal year during the assessment year. This includes not only your income but also deductions and taxes paid.
Role of the Tax Authorities:
During the assessment year, the tax authorities carefully look over the ITR that was sent in. Not only is it their job to make sure the information given is correct, but they also have to make sure that people follow all of the complicated tax rules that affect their money.
Chance to Make Corrections:
The assessment year gives people a special chance to fix mistakes they made on their tax forms. The ability to file an updated return within a certain amount of time makes sure that any mistakes are fixed, which leads to a more accurate picture of income and taxes.
How to File Taxes For The Assessment Year?
Here is a simple plan you can follow if you need to file your taxes for the Assessment Year:
- Get all the papers that show how much money you make, like payslips, bank records, and proofs of investments.
- Choose the right ITR form (ITR-1 to ITR-7) based on the type and source of your income.
- Choose whether to do your taxes offline or online.
- Make an account on https://www.incometaxindiaefiling.gov.in/, which is the official website for e-filing your income tax.
- Give correct information about your income and deductions on the ITR form.
- You have to link your Aadhaar or PAN card to your tax return.
- Compute how much tax you owe based on your reported income and expenses.
- To file online, put the filled-out ITR form on the e-filing site.
- Finish the verification process for your return. You can do this online with Aadhaar OTP, EVC, or by sending a paper ITR-V to the CPC, Bengaluru.
- For future use, keep copies of your filed return, acknowledgments, and any other papers that back up your claim.
FAQs
How to change assessment year in TDS challan?
Write a letter to the Jurisdictional Assessing Officer asking for corrections to be made to the challan. Include any supporting documents and send them to the Income Tax Office. Ask them to fix the assessment year that was put wrongly on the challan.
What is the significance of the assessment year for taxpayers?
Your income from a certain financial year is taxable from April 1st to March 31st of each year. This is called your “assessment year.” You have to send in your income tax return during the appropriate assessment year. The year right after the Financial Year is the review year.