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Assessment Year

Assessment Year (AY) is a jargon used in the context of income tax. All income tax calculations go by the Financial Year (FY), which stretches from 1 April of one year, to 31 March of the next. Say we are dealing with the accounts of the FY 2012-13. While the tax for income in this FY itself is typically paid in the same FY itself, the process of filing returns and closing books happens in the following year, in this case 2013-14. This following year is called Assessment Year (AY).

A simple thumb-rule to remember is that the AY is always the year following the year in which income was earned. While filing returns or otherwise corresponding with the Income Tax department, it is important to understand and quote the correct Assessment Year to avoid confusion.

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