The assessment year is the year immediately following the prior financial year. It is the year in which income earned in the previous FY is assessed for the tax liability. The time period starts from April and ends in March.
The main difference between the assessment year and the financial year is that the AY is used to assess the tax liability on the income earned in the preceding financial year, while the financial year is used for financial management and accounting purposes.
Length of period
|Financial year||Assessment year|
01/04/2022 to 31/03/2023
|2022 to 2023||2023 to 2024|
|01/04/2021 to 31/03/2022||2021 to 2022||
2022 to 2023
|01/04/2020 to 31/03/2021||2020 to 2021||
2021 to 2022
Since income cannot be taxed until earned, the tax is assessed immediately after the FY ends.
It is also impossible to precisely predict the income earned in a financial year before the year ends. Therefore, taxpayers have to select an AY while filing their income tax returns.