Not all the Company Information is available. 4. Assessment year is the year followed by the financial year in which the evaluation of the previous year’s income is done, tax is paid on the same and ITR is filed. E.g. Financial year is the year for which an assessee's income for the previous year is assessed under the IT Act for taxation. The Previous year is the year for which the data and sources of Income are collected and organized. Assessment year [Section 2(9)] The term has been defined under section 2(9). Check Also: [1000+] B.Ed Lesson Plans; Financial Year is the actual year starting with 1st of April and ending on 31st of March for which you’re filing your return and the Assessment Year will always be the “succeeding year”. 1-4-2017 to 31-3-2018. AY is the year following the financial year in which you have to evaluate the previous year’s income and pay taxes on it. For Assessment Year 2018-2019 the Previous Year should be the Financial Year ending 31st March 2018. It is mandatory for all assessee to follow financial year (from 1st April to 31st March) as previous year for Income-Tax purpose. Previous Year (P.Y. Explain. It is the financial year, in which the income earned in the previous year is taxable. All taxpayers are required to follow a uniform Previous Year. Previous Year is the year … Assessment Year is the financial year, in which the income of the assessee earned during the previous year is evaluated and taxed. The year in which income is earned in the previous year and such income is taxable in the immediately following year which is the assessment year. Income of an assesse for a previous year is charged to income-tax in the assessment year following the previous year. It is usually the financial year preceding the current financial year. The actual transactions and data collection take place in the previous year while the calculation and collection of taxes by the Government happens in the Assessment Year. For example, if the latest date in the dates argument refers to the year 2009, then this function returns all dates for the year of 2008, up to the specified year_end_date. Penalty for late filing of ITR, after due date. As such it is known as financial year. Enumerate the cases when income of previous year is not taxable in the immediately following assessment year. Every year we pay taxes over the Income earned in the Previous Year (that is, the transactions that took place in the preceding year of the current year). It is the financial year preceding the assessment year. Financial Year is the year or the time period within which income is earned. When we talk about paying taxes, usually the year preceding the current financial year is the previous year while the current year itself is the assessment year. Common FAQs on Assessment Year(AY) & Financial Year(FY) When it comes to income tax people are often heard talking about income tax return filing, income tax notices, the refund status, deductions, tax benefits and much more. The previous year is either less than 12 or equal to 12 months while the assessment year is always a complete period of 12 months. The year in which we earn is called Previous Year in the words of the Income Tax Act. Yeah you are right – this is the year for which your income is being assessed in the Assessment Year. As such for the assessment year 2018-2019, the Previous Year for continuing business is 2017-2018 i.e. No SDL reference number or Company is Exempt but SDL has been calculated for one or more employees. A short form of this is PY which stands for Previous Year. What does Assessment Year mean? Ok, we discuss these, one by one. In short its written as FY or PY. It is the year in which the income that one has earned in the financial year that is just ended is evaluated. How to file old ITRs? The definition of the assessment year is given in Section 2(9) of the Income Tax Act, 1961. For instance, if we consider the financial year starting from 1 April 2020 to 31 March 2021, then it is known to be Financial year 2020-21. The taxes collected are basically, collected for the Previous year but in the Assessment Year. It can be less than or equal to 12 months. As such it is known as financial year. Income […] On the other hand, Assessment Year refers to the period of twelve months, starting on the 1st of April. Eg. 3. Assessment year (AY) is the immediate year following the FY wherein income of the previous year or that particular FY is assessed. A must for all commerce students in Graduation CA CS CMA MCom MBA. Your email address will not be published. Hello Previous Year and Assessment year are the Commonly used terms in Income Tax.According to Income tax Act Previous Year means a Year in Which Income is Earned and Assessment Year means Income of Previous Year is assessed and Tax is Paid. The previous year is the year for which the data of activity and income is collected and compiled whereas the assessment year is the year in which Income Tax is calculated and collected. maintains its accounts for a period of 12 months i.e. 1-4-2017 to 31-3-2018. Previous Year vs Assessment Year?? Hie Kruthika, Assessment Year ----- - Assessment Year (AY) is defined in section 2 (9) of Income Tax Act, 1961 as a year in which income of an assessee of the previous year/last year needed to be assessed. Accordingly Previous Year in the case of a continuing business shall be the Financial Year immediately preceding the relevant Assessment Year, whereas Previous Year in the cases of newly set up business or for new source of income shall be the period commencing from the date of new business set up or source of income coming into existence to the forthcoming 31st March of that Financial Year immediately preceding the relevant Assessment Year. Difference between Assessment Year and Financial Year. The year is important to analyze data and calculate Income Tax. The word previous is a big give away. 2. For example, the current year is 2017-2018. Assessment Year is the year in which one file income tax returns of the year prior to it (i.e. Association of persons, Body of individuals or any artificial juridical person established for a definite objective. Income […] You will understand the difference clearly through the following example. Similar Posts. And they are: 1. 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