Budget 2024 Update
FM Nirmala Sitharaman has made two announcements for those opting for the new tax regime.
First, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-.
Second, in the new tax regime, the tax rate structure is proposed to be revised, as follows:
- 0-3 lakh rupees - NIL tax
- 3-7 lakh rupees - 5% tax
- 7-10 lakh rupees - 10% tax
- 10-12 lakh rupees - 15% tax
- 12-15 lakh rupees - 20% tax
- Above 15 lakh rupees - 30% tax
As a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500/- in income tax.
What is Financial Year?
The financial year is the year in which you have earned the income. It starts on the 1st of April of the calendar year & ends on the 31st of March of the next calendar year. The term “Financial Year” is also commonly referred to as F.Y. For example, the financial year 2024-25 started on April 1st, 2024, and will end on March 31, 2025.
An assessee is required to calculate and plan taxes for the financial year, but an income tax return is to be filed in the next year or Assessment Year.
What is Assessment Year?
Assessment year means the year (from 1st April to 31st March) in which income you earn in a particular financial year is taxed. You are required to file your income tax return in the relevant assessment year. The assessment year is the year just succeeding the Financial Year. E.g.,
- Income earned in the current Financial Year 2023-24 (i.e., from 1st April 2023 to 31st March 2024) will become taxable in Assessment Year 2024-25 (i.e., from 1st April 2024 to 31st March 2025 ).
>Assessment and Financial Year in India for the Recent Years
| Period |
Financial Year |
Assessment Year |
| 1 April 2018 to 31st March 2019 |
2018-19 |
2019-20 |
| 1 April 2019 to 31st March 2020 |
2019-20 |
2020-21 |
| 1 April 2020 to 31st March 2021 |
2020-21 |
2021-22 |
| 1 April 2021 to 31st March 2022 |
2021-22 |
2022-23 |
| 1 April 2022 to 31st March 2023 |
2022-23 |
2023-24 |
| 1 April 2023 to 31st March 2024 |
2023-24 |
2024-25 |
What is the difference between Assessment Year and Financial Year?
From the tax perspective, a Financial year is a year in which a person earns an income. On the other hand, The assessment year is the year followed by the financial year in which the previous year’s income is evaluated, tax is paid on the same, and an Income tax Return (ITR) is filed.
For instance, if we consider the financial year from 1 April 2022 to 31 March 2023, it is known to be the Financial year 2022-23. The assessment year begins after the financial year ends, so the assessment year of FY 2022-23 would be AY 2023-24.
For FY 2023-24 and AY 2024-25, the tax filing has already been started. To avoid a last-minute rush, file today.
Income tax forms have an assessment year because the income for any financial year is evaluated and taxed in the following year, i.e., the assessment year. Income cannot be taxed before it is earned. Adverse situations can come up either at the beginning, middle, or end of a financial year. Hence, it is made mandatory to select the Assessment year while filing income tax returns.
Need assistance filing your ITR for FY 2023-24 (AY 2024-25)? Book eCA Today!
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