The Income Statement of the companies and the Balance sheet are prepared across the globe within a span of 1year. The date of this period varies from country to country.All About Financial Year.
All About Financial Year
In India this period of 1 year usually starts on 1st of April and lasts till 31st March of the next year. The year in which an individual or company earns income is called the Financial Year or the Fiscal Year. Generally, the Income Tax Returns are filed and taxes for companies are paid in the next year after the end of the Financial Year. The next year in which the income is assessed to tax is called the Assessment year.
So, for example if you are preparing the accounts for the year starting on 1st April 2016 and ending on 31st March 2017, then this period will be called as Fiscal or Financial Year 2016-17. The income in this year will be taxed in the following year that will be the assessment year of the income, which will be 2017-18. The due date of filing Income Tax Returns is 31st July/ 30th September of the assessment year for individuals and companies respectively.
In lucid terms, Financial year is the year in which the income is earned, and Assessment year is the year in which the income is assessed, taxed and tax returns are filed. To avoid the confusion created by the Financial Year and Assessment year, the new direct tax code has been proposed to remove the concept of Assessment Year, which will make understanding taxes easy for the common man. However, this code is still a proposal and has not been implemented yet.
income Tax Refund
As we already told you Financial Year in India Starts on 1ST April and ends on 31st March of the following year, well this is not the case with most of the countries, as various countries have their different financial years.