Previous Year Income Tax Definition

Many firms simply use the calendar year as their tax year however this is not always required.

Previous year income tax definition. Definition of previous year. Since income tax is on income of a financial previous year or period so tax filings and assessment can start thereafter. For the purposes of this act previous year means the financial year immediately preceding the assessment year. For example assessment year 2020 21 is a period of 12 months starting from 1 apr.

Business or profession newly set up during the financial read more. Assessment year means the period of twelve 12 months commencing on the 1st day of april every year. Income tax examination previous year question papers pdf. The most important thing an application requires before giving any income tax examination is the previous year s question papers.

An accounting technique with which a company retroactively applies net operating losses to a preceding year s income in order to reduce tax liabilities present in that previous year. It is the year in which a person or entity earns income which becomes taxable in the assessment year. In income tax act 1961 the term previous year is defined under section 3. Probably that s why it s called assessment year period.

Also applicants should be aware of the syllabus and examination pattern. For income tax examination the applicants must be thoroughly prepared. 2020 and ending with 31 march 2021. E g a y 2019 20 is a year which commences on april 1 2019 and ends on march 31 2020.

Previous year previous year defined. 1 for the purposes of this act previous year means a the financial year immediately preceding the assessment year. When a firm begins or ends. Previous year indicates the financial year immediately preceding the assessment year.

Definition of previous year. Taxation income of previous year of an assessee is taxed in the following assessment year at the rates prescribed under the relevant finance act. In accordance with the definition given in section 2 9 of the income tax act 1961 the assessment year for an assessee is for a period of 12 months commencing from 1st april of every year. Or b if the accounts of the assessee have been made up to a date within the said financial year then at the option of the assessee the twelve months ending on such date.

The period of time which is covered by a particular tax return. It is the year just after the previous year in which income earned in the previous year is charged to tax. Provided that in the case of a business or profession newly set up or a source of income newly coming into existence in the said financial year the previous year shall be the period beginning with the date of setting up.