I would love to learn about Indiaโ€™s financial system so that I can better control my personal and professional finance. I am a complete novice in the financial planning department. This post is me trying to learn about financial terms actively.

  • Financial Year: A Financial Year (FY) is the period between 1st April and 31st March โ€“ the accounting year in which you earn an income.

  • Assessment Year: The assessment year (AY) is the year that comes after the FY. This is the time in which the income earned during FY is assessed and taxed.

From an income tax perspective, FY is the year in which you earn an income. AY is the year following the financial year in which you have to evaluate the previous yearโ€™s income and pay taxes on it.

Due dates

  • The due date for filing income tax returns is the date by which the returns can be filed without any late fee or penalty.
  • Usually, the due date to file an income tax return is 31st July for individuals and non-audit cases and 31st October for audit cases of the relevant assessment year.

Who needs to file ITR

  • If the total income for the FY is more than 2.5 Lakhs, then it is mandatory to file ITR.
  • Students who get stipends also need to file ITR, and it might be a good idea to build your ITR profile if you wish to take loans in the future or need to apply for VISA.
  • The logic in both cases is quite simple; the bank needs to know that you have a good financial sense. Proper filing of ITR will generate trust with the bank. If you do not follow GOIโ€™s proper financial rules, they will not trust you.
  • In the second case, if you wish to go abroad, the VISA issuing authority needs to know that you are a responsible citizen of your country and would follow the rules of their country.