WHAT IS ASSESSMENT YEAR AND PREVIOUS YEAR

(i) Assessment year :

 The term has been defined under section 2(9). This 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 2013-14, the relevant previous year is 2012-13 (1.4.2012 to 31.3.2013).

(ii) Previous year [Section 3] 

It 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.