Assessment Year - What Is The Meaning Of Assessment Year And Its Importance | HRMantra Hr Software

The Assessment year is the period when the income of a person is checked. It is the time that assists people in finding out how much they are obliged to as income tax. The Assessment year comes after the financial year. An FY runs from April 1st to March 31st of the next year.

People often get confused with the assessment year and the financial year. These are the two different years which stand for different purposes and hold importance in their own way. You are here, too, to clear basics on the assessment year? Alright, without wasting any further time, let''s get started!

Meaning of Assessment Year

AY begins on April 1, 2019, and ends on March 31, 2020. Meanwhile, during this period, the income for the previous year is taxed and evaluated for making your income tax return. Since you cannot be taxed on income before you actually make it, you will be taxed on it in the following year, right after the end of the financial year. To illustrate, the income that you earn during the financial year, say, 1st April 2022 to 31st March 2023, you will pay tax and be assessed for in the immediately following year, that is, 1st April 2023 to 31st March.

Financial Year Vs Assessment Year

Incomes earned in any particular year for the purposes of income tax are considered to have been earned in the financial year. The year following any particular financial year is the assessment year. This year is used to quantify income for the previous year, on which taxes will be paid.

Let''s assume that your fiscal year is running from April 1, 2020, to March 31, 2021. The name for this time is FY 2020-21. In such a case, the tax year for the money made during this time would start post the end of the financial year, on April 1, 2021, and end on March 31, 2022. So, the assessment year, hence, would be 2021–22.

Now that you know what an assessment year and financial year are, let''s see what the role of the assessment year is in the following section!

Role of the Assessment Year

The assessment year, when computing how much tax a person or business needs to pay, is the most important period of time. It''s a very integral step setting a stage for the whole tax cycle.

Requirements for Filing

You are obligated to provide the total account of all your economic activities for the previous financial year in your assessment year. This falls under your income, but at the same time, it includes deductions and tax paid.

Role of the Tax Authorities :

In the assessment year, the tax authorities go scrupulously through the ITR that was submitted. Other than their duty to check on the accuracy of the information provided, they are also under a mandate to see that all the complex rules of taxation that apply to the money of people are complied with.

Opportunity for Rectification:

This provides the best opportunity to correct errors made in the submission of forms during the assessment year. The facility to file a revised return within a specified period of time makes sure that mistakes are repaired and thus, one gets a more realistic picture of income and levies paid.

How to File Taxes For The Assessment Year?

Here is a simple plan you can follow if you need to file your taxes for the Assessment Year:

1. Get all the papers showing the quantum of income, payslips, bank records, and proofs of investments.
2. Choose the appropriate ITR form; that is, ITR 1 to ITR 7, depending on the type and source of income.
3. Choose offline or online mode for returning tax.
4. First of all, log on to https://www.incometaxindiaefiling.gov.in/, the official web portal for filing your income tax electronically.
5. Fill up the correct information in regard to your income and the deductions in the form for return of income.
6. Link your Aadhaar or PAN card to the tax return.
7. Round off the amount of tax payable to the nearest multiple of ? 1 after computing your tax liability from your reported income and expenditure.
8. Now, fill the ITR form online and upload it to the e-filing site for online filing.
9. Verify Your Return Complete the verification of your return. You can do this online with Aadhaar OTP, EVC, or y paper ITR-V to CPC, Bengaluru. Take a copy of your filed return and acknowledgment and all supporting papers of your claim for future use

FAQs

How to change assessment year in TDS challan?

Write a letter to the Jurisdictional Assessing Officer requesting that corrections be made in the challan. Attach any supporting documents and dispatch to the Income Tax Office. Ask for rectification of the assessment year which was wrongly put on the challan.

Why is the correct assessment year important to the taxpayer?

The money you get in any financial year is taxed for the period beginning April 1 and ending on March 31 of every year. This period is known as your ""assessment year."" You are supposed to submit your return of income tax in the appropriate assessment year. The year subsequent to the Financial Year is the review year.

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