Difference Between Financial Year and Assessment Year

Hello friends we are well known that any books of accounts are closed at the end of the Financial-year. But what is meant by a Financial Year? What is Assessment year...? Many were confused regarding this....

Well let me explain you about Financial Year and Assessment Year in brief.....

Financial Year

• Usually Financial Year differs from one country to other.
• The year in which income is earned is known as FINANCIAL YEAR.
• The Balance sheet and Income statements of companies across the globe are prepared for a period of one year. 
• However this year is different from country to country.
• In INDIA this period starts from 1^st April and ends on 31^st March. The period in which income is earned is known as FINANCIAL YEAR or FISCAL YEAR .

Assessment Year

• The period in which income is assessed is known as ASSESSMENT YEAR.
• Usually the Balance sheet and Income statements are prepared after completion of this period. 
• The income tax returns are filed and taxes are paid in the next year after the completion of the Financial Year.

Usually Financial Year is denoted as F/Y and Assessment Year is denoted as A/S.

For example if the accounts are prepared for the year starting 1^st April 2013 and ending on 31st March 2014.This period would be called as Financial Year 2013-14.And this income would be assessed for tax in the next year and this period would be called as Assessment Year 2014-15.

The due date for filing income tax return for any Financial Year is 31^st July/30^th September of the Assessment year. In case if the income tax returns are filed for the financial year 2013-14, the due date for filing income tax return would be 31^st July 2014/30^th September 2014 as the case may be.

In order to understand very easily the Financial Year is the year in which income is earned and Assessment Year is the year in which the income is assessed and all taxes are paid and tax returns filed. As the Financial Year is the previous year to the Assessment Year sometimes it is also called as “Previous year”.

Calendar year

A calendar year starts from 1^st Jan and ends on 31^st Dec. Some of the countries follow this period as the Financial Year. However in India we follow the financial year from 1^st April to 31^st March.                                   

 In order to make you more clear we provide you the following table

Year starts from	Year ends on	Financial Year/Fiscal Year	Assessment Year
1st April 2010	31st March 2011	2010-11	2011-12
1st April 2011	31st March 2012	2011-12	2012-13
1st April 2012	31st March 2013	2012-13	2013-14
1st April 2013	31st March 2014	2013-14	2014-15
1st April 2014	31st March 2015	2014-15	2015-16