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What is the period for which a person’s income is taken into account for the purpose of income tax?
Income-tax is levied on the annual income of a person. The year under the Income-tax Law is the period starting from 1st April and ending on 31st March of next calendar year.
The Income-tax Law classifies the year as (1) Previous year, and (2) Assessment year.
Previous year means the year in which income is earned
Assessment year means the year in which income is charged to tax.
e.g. Income earned during the period of 1st April, 2021 to 31st March, 2022 is treated as income of the previous year 2021-22. Income of the previous year 2021-22 will be charged to tax in the next year, i.e., in the assessment year 2022-23
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