Assessment Year - Financial Year for Income Tax purpose in India

When you do your taxes at the end of the year, you will fill out a schedule C income and expenses unless you are starting a bigger business. In this case, you will be paying taxes quarterly. Be sure to get with an accountant and tax adviser if it is a bigger business.

financial year is the year during which income is earned and for which the returns are filed.

assessment year is the year during which the income earned during the financial year is assessed.

since assessment can be done only after complete of financial year, it comes after the FY. therefore there is a gap of 1 year between the both.

in india, the year starts from 01april and ends on 31march. since there are 2 calendar years involved, it is written like 2008-09, which means 01april2008 to 31march2009.

Then again, some people simply feel that this is just a load of frills.
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As per the income-tax law in India, a year starts from 1st April and ends on 31st March. For a person to make Income within April to March is known as financial year about which he has to file his return for assessment in the next period of April to March immediately following the Financial Year and that is called the assessment year. Thus the previous year is called Financial year.

For the current assessment year 2008-09, the previous year or the Financial is 2007-08. That is one has to submit his return of income during the assessment year for the previous year starting from April and ending with March.

Of course in case of new businesses starting during the course of the previous year, the duration of the previous year would be shorter.

Mohan Lal Sharma