Assessment Year VS Financial Year - Income Tax

For tax purposes, financial year (FY) is the year in which you earn your income and also pay your taxes on this earned income. An FY starts on 1 April and ends on 31 March.

Assessment year (AY) is the year following the financial year, in which your income is assessed (you calculate your total income and tax payable on the same). This also lasts from 1 April to 31 March and is the year in which you file your income tax returns for the taxes paid in the relevant financial year.

Example : if 01 April 2020 to 31 March 2021 is financial year

then 01 April 2021 to 31 March 2022 will be your assessment year