{"id":7057,"date":"2025-06-25T11:51:04","date_gmt":"2025-06-25T11:51:04","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7057"},"modified":"2025-06-25T11:51:07","modified_gmt":"2025-06-25T11:51:07","slug":"financial-year-and-assessment-year","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/financial-year-and-assessment-year\/","title":{"rendered":"Financial Year and Assessment Year"},"content":{"rendered":"<p><strong>Financial Year (FY)<\/strong> and <strong>Assessment Year (AY)<\/strong> are key terms in the Indian <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a> system. Understanding their differences is crucial for accurate tax filing.<\/p>\n\n\n\n<h3 id=\"what-is-a-financial-year-fy\" class=\"wp-block-heading\">What is a Financial Year (FY)?<\/h3>\n\n\n\n<p>The <strong>Financial Year<\/strong> is the 12-month period during which you earn income.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Duration<\/strong>: April 1 to March 31 of the following year.<\/li>\n\n\n\n<li><strong>Purpose<\/strong>: To record all income earned from various sources like salary, business, or investments.<\/li>\n\n\n\n<li><strong>Example<\/strong>: Income earned between April 1, 2024, and March 31, 2025, falls under <strong>FY 2024-25<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"what-is-an-assessment-year-ay\" class=\"wp-block-heading\">What is an Assessment Year (AY)?<\/h3>\n\n\n\n<p>The <strong>Assessment Year<\/strong> is the year immediately following the Financial Year, during which the income earned is assessed and taxed.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Duration<\/strong>: April 1 to March 31 of the next year.<\/li>\n\n\n\n<li><strong>Purpose<\/strong>: To evaluate and file taxes on the income earned in the preceding Financial Year.<\/li>\n\n\n\n<li><strong>Example<\/strong>: For income earned in <strong>FY 2024-25<\/strong>, the corresponding <strong>AY is 2025-26<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"key-differences-between-fy-and-ay\" class=\"wp-block-heading\">Key Differences Between FY and AY<\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>Aspect<\/th><th>Financial Year (FY)<\/th><th>Assessment Year (AY)<\/th><\/tr><\/thead><tbody><tr><td><strong>Definition<\/strong><\/td><td>Year in which income is earned<\/td><td>Year in which income is assessed<\/td><\/tr><tr><td><strong>Time Frame<\/strong><\/td><td>April 1 to March 31<\/td><td>April 1 to March 31 (following year)<\/td><\/tr><tr><td><strong>Purpose<\/strong><\/td><td>Earning period<\/td><td>Tax evaluation and filing period<\/td><\/tr><tr><td><strong>Example<\/strong><\/td><td>FY 2024-25<\/td><td>AY 2025-26<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 id=\"why-does-the-itr-form-mention-ay\" class=\"wp-block-heading\">Why Does the ITR Form Mention AY?<\/h3>\n\n\n\n<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax<\/a> Return (ITR) forms require the <strong>Assessment Year<\/strong> because taxes are filed after the income is earned. This allows for a complete assessment of the previous year&#x2019;s income.<\/p>\n\n\n\n<h3 id=\"real-life-example\" class=\"wp-block-heading\">Real-Life Example<\/h3>\n\n\n\n<p>If you earned income from April 1, 2023, to March 31, 2024 (<strong>FY 2023-24<\/strong>), you would file your tax return in the period April 1, 2024, to March 31, 2025 (<strong>AY 2024-25<\/strong>).<\/p>\n\n\n\n<h3 id=\"important-dates\" class=\"wp-block-heading\">Important Dates<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>FY 2024-25<\/strong>: April 1, 2024 &#x2013; March 31, 2025<\/li>\n\n\n\n<li><strong>AY 2025-26<\/strong>: April 1, 2025 &#x2013; March 31, 2026<\/li>\n\n\n\n<li><strong>ITR Filing Deadline<\/strong>: Typically July 31 of the Assessment Year; for AY 2025-26, the deadline is September 15, 2025. <\/li>\n<\/ul>\n\n\n\n<h3 id=\"summary\" class=\"wp-block-heading\">Summary<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Financial Year (FY)<\/strong>: Period when income is earned.<\/li>\n\n\n\n<li><strong>Assessment Year (AY)<\/strong>: Period when income is assessed and taxed.<\/li>\n<\/ul>\n\n\n\n<p>Understanding the distinction between FY and AY ensures accurate and timely tax filing.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Financial Year (FY) and Assessment Year (AY) are key terms in the Indian tax system. Understanding their differences is crucial for accurate tax filing. What is a Financial Year (FY)? The Financial Year is the 12-month period during which you earn income. What is an Assessment Year (AY)? The Assessment Year is the year immediately [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7057","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7057","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7057\/revisions"}],"predecessor-version":[{"id":7058,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7057\/revisions\/7058"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7057"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}