• Webpages
  • Documents
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment

For NRI Customers

(To Buy a Policy)

(If you're our existing customer)

For Online Policy Purchase

(New and Ongoing Applications)

Branch Locator

For Existing Customers

(Issued Policy)

Fund Performance Check

Assessment Year & Financial Year

Financial Year (FY) and Assessment Year (AY) are two key terms that you must know about if you are a taxpayer. In this article, let’s learn their exact meaning and the differences between them.
Due to technological advances, tax filing has now become a very easy process that you can carry out online even from the comfort of your home. But, before you start doing that by yourself, you must know about some crucial accounting terms.  ...Read More

GET A FREE QUOTE

We respect our customers' privacy and do not spam them.

I authorize HDFC Life and its representatives to contact me through Call, Email, SMS or WhatsApp. This consent overrides my registration under DNC / NDNC (this would mean we would contact you even if you are registered on any Do Not Disturb list).

Assessment Year & Financial Year

What is an Assessment Year (AY) and Financial Year (FY)?

What is an Assessment Year (AY) and Financial Year (FY)?
July 26, 2024

 

Let us understand the exact meaning of AY and FY and elaborate on the differences between them. Among other things, we shall also find the answer to the most basic question during tax filing: When is income generated taxed?

What is Financial Year?

The Financial Year can be simply defined as a period of 12 months in which income is earned.

Any revenue generated between April 1, 2022, and March 31, 2023, will be assessed for the current Fiscal Year (FY) 2022-23. The primary goal of the fiscal year is to compute income statements.

Just like all other businesses, a financial year in insurance companies starts on April 1 and ends on March 31. This is the time when revenue is generated through insurance policies. Throughout a fiscal year, insurance businesses apply for financial reporting and budgeting. A fiscal year is commonly used in accounting to calculate the financial statement.

What is Assessment Year?

The Assessment Year is the 12 month-period that comes right after the financial year. It is the period from April 1 to March 31, during which revenue produced during the fiscal year is taxed.

For example, the Assessment Year for any revenue produced between April 1, 2022, and March 31, 2023, would be 2023-24.

In layman terms, the assessment year is the year in which income is taxed and all taxes are paid and tax returns are filed. Always remember to file your income tax return within the relevant AY.

Get Guaranteed Returns with HDFC Life Sanchay Plus Plan

FY and AY for Recent Years

  1. Period: April 1, 2022 – March 31, 2023

    Financial Year: 2022 - 2023

    Assessment Year: 2023 – 2024

  2. Period: April 1, 2021 – March 31, 2022

    Financial Year: 2021 - 2022

    Assessment Year: 2022 – 2023

  3. Period: April 1, 2020 – March 31, 2021

    Financial Year: 2020 - 2021

    Assessment Year: 2021 – 2022

What is the difference between AY and FY?

Several differences exist between an Assessment Year and a financial year, which include the following:

A Financial Year is a 12-month period in which a person obtains income for tax purposes. An Assessment Year is a period when the previous year's earnings are assessed, taxes are due, and the filing of Income Tax Returns (ITRs) is done.

Both the Assessment Year and the Financial Year beginning on April 1 of a year and end on March 31 of the following year. For example, Financial Year 2022-23 refers to the fiscal year that runs from April 1, 2022, to March 31, 2023. The AY starts right after the FY ends. Therefore the assessment year for FY 2022-23 will be AY 2023-24.

As a result, the Financial Year is when corporations, salaried professions, and the elderly earn their money, while the next year, the accounting year, or AY, is when the income produced in the previous year is assessed.

Why does an ITR form have AY?

Income is not taxable until it is received. Negative occurrences may occur at any point of the year, whether it is the beginning, middle, or end of the year. An assessment year is included in the income tax forms because revenue for any fiscal year is computed and taxed in the following year. As a result, while filing income tax returns, you must select the Assessment year.

What is the financial year and assessment year called in Hindi?

In Hindi, a Financial year is called वित्तीय वर्ष (Vitteey varsh) and Assessment year is called निर्धारण वर्ष (nirdhaaran varsh).

FAQs on Assessment Year and Financial Year

Q: What is the assessment year (AY) and financial year (FY)?

A. The financial year is a period of 12 months starting from 1st April of the same year & ending 31st March, the accounting year in which income is earned. The assessment year is the year succeeding the financial year, in which the income earned in the financial year is taxed, assessed & return is filed.

Q: What is the meaning of previous year (PY) and assessment year ?

A. Previous year or PY refers to the financial year in which income is earned and expenses are incurred. The previous year starts on 1st April of the year and ends on 31st March of the next year. The assessment year is a 12-month period that succeeds the financial year or the previous year. The income earned in the previous year is taxed and return is filed in the assessment year.

Q: What is the difference between AY and FY?

A. Following are the key differences between AY and FY:

Financial Year (FY)

Assessment Year (AY)

Period where income is earned

Period after the financial year where income earned in a financial year is taxed and return is filed

It is a 12 month period which starts on 1st April of the current year and ends on 31st March of the following year.

It is also a 12 month period which starts on 1st April of the next year of financial year and ends on 31st March of the following one.

Example: For period 1st April 2023 to 31st March 2024, the financial year is 2023-24.

Example: For period 1st April 2023 to 31st March 2024, the assessment year is 2024-25.

Q: What is the financial year of 2024?

A. Financial year is considered to start on 1st April of the current year & ends on 31st March of the following year. The financial year of 2024 is from 1st April 2024 to 31st March 2025 or FY 2024-25.

Q: What is the financial year and assessment year in India?

A. The financial year in India starts on 1st April of the current year & ends on 31st March of the following year. The assessment year in India is the year right after the financial year. It is also a period of 12 months from 1st April to 31st March.

Q: What is the financial year for a company in India?

A. As per Section 2(41) of the Companies Act, 2013, the financial year in relation to any company or corporate body is the period ending on 31st March every year. If the company is incorporated on or after 1st January of a year, the financial year will be the period ending on the 31st March of the following year.

Related Article

Talk to an Advisor right away

Not sure which insurance to buy?

Talk to an
Advisor right away

Talk to an Advisor right away

We help you to choose best insurance plan based on your needs

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

LinkedIn profile

Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

LinkedIn profile

Reviewed By Reviewed By:
HDFC life
HDFC life

HDFC Life

Reviewed by Life Insurance Experts

HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER

We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

*Guaranteed Benefit is paid on survival during policy term provided all due premiums are paid during the premium payment term.

Note- Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax Laws are subject to change from time to time. Customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

@Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.

@@Provided all due premiums have been paid and the policy is in force.

ARN - INT/ED/05/24/11501