CONCEPT OF PREVIOUS YEAR AND

ASSESSMENT YEAR

By:Divya A
Dristhi B
Eshwar K R

MEANING OF ASSESSMENT YEAR

Section 2(9)

Assessment Year means a period of 12 months commencing on 1st April every

year.

The year in which tax is paid is called the assessment year while the year in
respect of the income of which the tax is levied is called the previous year.

For example, for the assessment year 2015-16, the relevant previous year is
2014-15 (1.4.2014 to 31.3.2015).

MEANING OF PREVIOUS YEAR

[Section 3]

Previous year means the financial year immediately

preceding the assessment year.

The income earned during the previous year is taxed in the

assessment year.

Business or profession newly set

up during the financial year

In such a case, the previous year shall be the period

beginning on the date of setting up of the business or
profession and ending with 31st March of the said financial year.

If a source of income comes into existence in the said

financial year, then the previous year will commence from
the date on which the source of income newly comes into
existence and will end with 31st March of the financial year.

Illustration:

A is running a business from 1992 onwards.

Determine the previous year for the assessment
year 2010-11.

Ans. The previous year will be 1.4.2009 to 31.3.2010.

Illustration:

A chartered accountant sets up his profession on 1st

July, 2009. Determine the previous year for the
assessment year 2010-11.

Ans. The previous year will be from 1.7.2009 to 31.3.2010.

Thank You