What is Previous Year?

PREVIOUS YEAR [Sec. 2(34) and 3)]
Definition :
For the purposes of this Act, “previous year” means the financial year immediately
preceding the assessment year.
Exception:
However, 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 pervious year shall be the period
beginning with the date of setting up of the business or profession, or, as the case may be,
the date on which the source of income newly comes into existence and ending with the
said financial year.
Comments :
Income earned in one year (known as the “Pervious year”) is taxed in the next year
(Known as the “assessment year”). Thus, the ‘previous year’ for the current assessment
year 2012 -2013, is the immediately preceding financial year i.e. 12 months from 1st April
2011 to 31st March 2012. The total income earned by a person from whatever sources
during the period from 1st April 2011 to 31st March 2012 will be taxed in the current
assessment year 2011-2012. The previous year is uniform for all persons and is to be
followed in respect of all types of income, irrespective of the ‘accounting year’ followed by
a person. i.e., even if assessees maintain books of accounts on the basis of calendar year,
or any other basis, for income tax purpose, the previous year will be the financial year.