What is an Assessment Year: All You Need to Know About It

What Do You Mean by Assessment Year?

The terms Assessment Year (AY) and Financial Year (FY) are commonly used. Taxpayers are quite familiar with them, and they are important for filing ITR returns. Financial planners and CAs carry out the task for their clients. Let us have a close look at what an assessment year is.

After the financial year ends, people file their ITRs. This period is the assessment year. This is the period when your previous year’s income undergoes assessment. The time during which you earn money is the financial year.

What is the Difference Between AY and FY?

In simple terms, the financial year is when salaried people earn money. The assessment year is when the same money undergoes evaluation for ITR.

For example, the financial year starts on April 1, 2021, and ends on March 31, 2022.

The money you earn during this time will undergo evaluation the following year. That is from April 1, 2022, to March 31, 2023. This is the assessment year.

Why Is AY Essential for ITR?

Income for every financial year undergoes evaluation in the assessment year. Therefore, ITR forms have AY. During the financial year, events can take place. For instance, job loss, new investments, and changes of jobs are possible.

Besides, you cannot know the total income in a financial year before it ends. Therefore, the AY period begins only after the FY period ends.

How to File ITR: Log In and Registration

You can file your ITR online from the comfort of your home. The process is called E-filing. The best part of the process is that it is easy and quick. It helps save money, as you do not have to hire anyone to do it. We will look at how to file ITR. But first, let’s look at how to log in or register on the portal.

Step 1: Here is the website you should visit.

https://www.incometax.gov.in/iec/foportal

Step 2: Log into your account if you already have one. If you do not have an account, first register yourself and then login.

Step 3: Choose the ‘Taxpayer’ option. Put in your PAN card details. Select ‘Validate.’ Next, choose the ‘Continue’ option.

Step 4: Enter name, gender, address, date of birth, and other such details.

Step 5: Give your registered contact number along with your email ID.

Step 6: Now that you are done filling out the form, choose the ‘Continue’ tab.

Step 7: The registered mobile number will receive an OTP. Verify the details to continue.

Step 8: Enter the correct OTP. Now, follow the steps to proceed with the registration.

Step 9: A new window will open once you verify the OTP. If you need to change any details, now is the time. Make certain that you only provide accurate information. If you change any details, you will receive an OTP. This is to verify the changes.

Step 10: Now, you need to set a password and a secure login message.

Step 11: Once you are done, select ‘Register’. You will get a confirmation message. The message will specify that the registration was successful.

Step-by-step Guide on How to File an ITR on the Portal

In this section, we will look at the second step of the process. That is how to file ITR in the assessment year.

Before going ahead with the process, understand the category you are in. Then, choose an ITR form. Meanwhile, let us look at the steps on how to file ITR below.

Step 1: Visit the official website for tax e-filing. Select the ‘Login’ button.

Step 2: Put in your username. Choose ‘Continue’. Finally, put in your password.

Step 3: Now, you are logged into the official portal. Choose the e-file option. Select ‘File Income Tax Return.’

Step 4: Choose the assessment year for which you need to file an ITR. Select ‘Continue.’

Step 5: You can now choose whether to file your returns offline or online. Choose online mode because it is simple and quick.

Step 6: Here, you will have three options. They are ‘Individual’, ‘HUF’, or ‘Others.’

Step 7: Select the ITR you wish to file it for. Choose from ITR-1, ITR-2, and ITR-4.

Step 8: Now, you will get an option to select the reason for filing the returns. Choose the right option here.

Step 9: Enter your bank account details. If the details are already present, validate them.

Step 10: You will now be redirected to a new page. Look through all the details and confirm them.

Step 11: Now, comes the final step. Verify the returns. Also, make sure to send a hard copy to the Income Tax Department. This verification is necessary.

ITR Filing: The Importance of ITR Filing

The government requires every working individual with an annual income to file a tax return. This is done in the assessment year. You should calculate the tax and pay it before the deadline. A lack of payment will lead to penalties. Piramal Finance is an online platform that allows you to learn everything you need to know about relevant acts and developments in the world of finance. For more such information on financial matters or about personal loans, credit cards, and financial management, check out more blogs on their website!