Meaning
This term is crucial for understanding income tax filing and compliance.Definition
An Assessment Year (AY) is the period of 12 months, commencing from April 1st and ending on March 31st of the following year, immediately succeeding the Previous Year.Importance in Taxation
It is the year during which the income earned in the Previous Year is formally assessed for taxation. Taxpayers file their income tax returns and pay taxes based on this assessment.Relation to Previous Year (Financial Year)
The Assessment Year always follows the Financial Year (or Previous Year). For example, income generated in the Financial Year 2023-24 (April 1, 2023 – March 31, 2024) is assessed in the Assessment Year 2024-25.Author
