The Total Amount Sheet and Earnings statement of companies around the world are often prepared for 12 months. However, the date that this era starts differs from nation to nation.
In India, this 12 months period starts from first April and ends on 31st March. This era where the earnings is earned is called the Financial Year or Fiscal Year. The tax returns are filed and taxes for an organization are often compensated within the next year following the finish from the Financial Year. The following year where the earnings is assessed to tax is known as because the Assessment Year.
So in situation the accounts are now being ready for the entire year beginning first April 2013 and ending on 31st March 2014, this era could be known as Financial Year 2013-14. Which earnings could be assessed to tax within the next year which period could be known as as Assessment Year 2014-15.
The deadline for filing tax returns for any financial year is 31st This summer/30th Sept from the Assessment Year. If the tax returns are now being declared the financial year 2013-14, the deadline for filing the tax returns could be 31st This summer 2014/30th Sept 2014 because the situation might be.
Suggested Read: Technique of filing your Tax Returns
Basically, Financial Year may be the year where the earnings is earned and assessment year may be the year where the earnings is assessed to tax and all sorts of taxes are compensated & tax statements filed. The tax rules and slab rates that are requested the assessment year 2014-15 could be identical to the rules for that financial year 2013-14 and so forth.
Suggested Read: Tax Slab Rate
The financial year is generally denoted as F/Y and assessment year is denoted like aOrB. Because the financial year may be the year that is before the assessment year, the financial year may also be also known as Previous Year for Tax purposes.
Types of Assessment Year
This idea of monetary Year and Assessment Year could be described with the aid of the next examples:-
Year starts from Year ends on Financial Year/ Fiscal Year/ Previous Year Assessment Year
- first April 2012 31st March 2013 2012-13 2013-14
- first April 2013 31st March 2014 2013-14 2014-15
- first April 2014 31st March 2015 2014-15 2015-16
- first April 2015 31st March 2016 2015-16 2016-17
- first April 2016 31st March 2017 2016-17 2017-18
To get rid of the confusion produced through the Financial Year and Assessment Year, the brand new direct tax code has suggested to get rid of the idea of assessment year which may help simplify the knowledge of taxes for that common man. However, the direct tax code continues to be an offer and is not implemented.
Financial Year being adopted around the world
In India, the one year financial year period starts from first April and ends on 31st March. However, this isn’t the situation with the countries and lots of countries think about a different duration of 12 several weeks with regards to computation of monetary year.
It isn’t just within the India the financial year doesn’t begin first Jan. Different countries start their F/Y during various areas of the entire year.
How come financial year in India begin with first April and never first Jan
Even though the exact reason behind why the Financial Year starts from first April and never first Jan is unknown, listed here are popularly expected is the causes of beginning the entire year from first April:-
- India was ruled through the Britishers in excess of 150 years. As well as in the United kingdom, the financial year starts from first April and never first Jan. And for that reason, exactly the same concept might have been put on India too through the Britishers after Independence the Indian Govt didn’t change this.
- Within the many regional calenders such as the Hindu calendar etc, 2012 starts within the month of April and this is usually a reason the govt also considered beginning the financial year within the month of April itself. Furthermore, the crop season in India also starts in April and leads to March.
- One more reason might be the several weeks of November and December are thought as Festival Season because of the existence of many festivals like Diwali, Christmas etc. The Inventory becomes manifest pretty quickly moving during this time period also it could have been hard to close the books of accounts during this time period. Furthermore, employees of numerous organisations will also be on the vacation during this time period also it will get hard to close the books during this time period.