While the payment of tax most important thing is the selection of Correct Assessment year. Many tax filers get confused with the Previous Year and Assessment year and proceed with payment of tax in the wrong year.
Previous Year: It means the financial year for which you have earned income.
Assessment Year: It means the year in which assessment of Income and tax liability is done for the income earned by you in the previous year. For example, you were working in TCS from 01st April 2019 to 31st March 2020. Here Financial Year is 2019-20 that is the year of earning salary income and assessment year is FY 2020-21 that is the year in which you will assess your income of FY 2019-20 and pay the required tax.
|Year Ending on||Financial Year||Assessment Year|
|31st March 2017||2017-18||2018-19|
|31st March 2018||2018-19||2019-20|
|31st March 2020||2019-20||2020-21|
|31st March 2021||2020-21||2021-22|
|31st March 2022||2021-22||2022-23|
While making payment of taxes we have to select assessment year and many taxpayers while payment of tax gets confused and selects financial year instead of the assessment year. For example, you have to pay tax for FY 2019-20, then AY will be 2020-21 but if you will select AY 2019-20 while payment of tax, the same will get credited in FY 2018-19 and AY 2019-20.
After the filing of the return, you will get a notice for non-payment of tax for FY 2019-20 (AY 2020-21) but you will be surprised to see this notice as you have already paid taxes. You received this notice because you have selected AY 2019-20 while payment of taxes and due to this error your tax paid got credited to the FY 2018-19 and not in FY 2019-20.
What to do next if I have made a mistake while payment of tax????????
Now you have two options.
Option1: Take your tax paid challan to the assessing officer and request for the updation of challan in correct Financial Year.
Option2: File a rectification request for the Financial year in which you have wrongly paid tax and claim the refund of that. Once refund will be generated your demand for the current year will get adjusted with the refund. However, there will be some differences in the account of interest charges.