Why Does an ITR Form have an Assessment Year?
The ITR form helps you report your income earned during the specific financial year and calculate your tax liability for the corresponding assessment year. It’s like a snapshot of your financial situation for that period, enabling the tax authorities to assess and collect the correct amount. Since income for any particular financial year is evaluated and taxed in the assessment year, income tax return forms have an assessment year (AY).
What is Assessment Year?
An Assessment Year (AY) is a term primarily used in the context of income tax systems, particularly in countries that follow a system of self-assessment. It is the year immediately following the Financial Year (FY) in which an individual or entity earns income. During the assessment year, taxpayers assess and declare their income for taxation purposes, calculate their tax liability, and file their income tax returns.
Table of Content
- Key Points about Assessment Year
- Assessment and Financial Year in India for Recent Years
- Example of Assessment Year
- What is a Financial Year?
- Difference Between Assessment Year and Financial Year
- Why Does an ITR Form have an Assessment Year?
- A Step-By-Step Guide to File Taxes for the Assessment Year
- Consequences of Not Filing Returns in India
- Mistakes to Avoid when Filing Taxes for the Assessment Year
- FAQs about Assessment Year