Time to pay your taxes! Do you know what is FY and AY?

Time to pay your Taxes!

According to Indian tax perspective, we often go through a slight confusion which in fact is quite simple. The two major terms are FY and AY. What is FY and AY? How do we differentiate FY and AY? What is the simple way to understand it? Why does an Income Tax form have AY?

FY — Financial year (2015–2016) where you earn your Income. It starts from 1st April and ends on 31st March. Then the financial year is called as FY 2015–2016.

AY — Assessment Year (2016–2017) Where you evaluate previous year’s Income & pay taxes. As financial year ends, Annual year starts from 1st April 2016 to 31st March 2017. Then the assessment year is called as AY 2016–2017.

As mentioned above in a very simple way, I believe it’s time to remind you all about the deadline i.e., till 31st July 2017.

Why does Income Tax return form have AY?

FY is evaluated and taxed in the AY, Income Tax returns form have AY. Income Tax cannot be paid before it is even earned, hence it has to be evaluated in the AY (upcoming year) as the FY ends.

What is E-Filing?

E-Filing is submitting your Income Taxes online. We only have 2 options i.e., traditional way to go Income Tax Department physically and file your taxes & the other way is to choose the online method to e-file. Over the years, it is being used by many among us and it is being is done for free.

www.acobook.com (Originally written for AcoBook Blog Posts)

Siva Kundeti

Tax Advisor

AcoBook LLC