A Basic direct Tax concept of Assessment year and financial year

1. ASSESSMENT YEAR AND
PREVIOUS YEAR
BY,NAVYA KINI H.
1st M.COM
18112

2. ASSESSMENT YEAR
Definition:
Sec.2(9) “Assessment year means a period of 12 months
commencing from 1st April every year". It ends on
31st March
 Assessment year is the following year in which this
income is assessed and taxed
 Assessment year always comes after Financial year.

3. PREVIOUS YEAR
• Definition:
Sec.3 : Till the assessment year 1988-89 an assessee could have
different previous years for different sources of income. In
order to bring uniformity in the assessment procedure the
Direct Taxes (amendment) Act 1987 amended Sec. 3 of the
Income tax act with effect from 1-4-1989.The section now
reads as follows “Previous year means the financial year
immediately preceding the assessment year”
 Previous year means the financial year immediately preceding
the assesemnet year
 Previous year is generally a year in which income is earned of
which assessment is done in assessment year

4.  In case of newly set up business or profession the
previous year begins with the date of the setting up of
business or profession and ends with the financial
year.
 Under the new section 3 of the Income Tax Act there
is no compulsion on any assessee to close accounts on
31st March only.

5. THE YEAR IN WHICH THE
INCOME IS EARNED IS KNOWN
AS PREVIOUS YEAR
AND IT IS TAXED IN THE NEXT
YEAR CALLED ASSESEMENT
YEAR
IN SHORT TO CONCLUDE WITH

6. THANKYOU