AY Vs FY:
AY stands for assessment year while FY stands for the financial year. From the perspective of an income tax financial year is the year in which a person earns an income. Assessment year is the year in which a financial year is followed i.e in which a previous year’s income and tax are evaluated.
In AY or Assessment year the previous year’s income is evaluated and pay tax on it. An AY comes after FY. For example, if a financial year starts from 1 April 2017 to 31 March 2018, then the AY of this financial year will starts from 1 April 2018 to 31 March 2019.
FY stands for the financial year which starts from 1 April and ends on 31 March of next year. In a financial year, a person earns money. And in the AY he pays tax on the income which he earned during FY. AY and FY are created from the perspective of tax. For both, the employees are businessmen AY and FY are very important and also for the government. Because Tax is a revenue for the government which the government uses for different purposes such as security of the state, infrastructure, education, health, and different R and D projects.
Main Difference between AY and FY:
FY refers to the financial year in which a person earns income from different sources whether it is from employment, business, or any other service while in the AY the person pays tax on the income which he earned during the FY. The following are some of the major differences between AY and FY.
- From the tax perspective, FY is the year in which a person earns money through different sources whereas on the other hand in the AY year the person pays taxes on the income which he earned during FY.