Meaning of Assessement year and Previous year under 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 31stMarch of next calendar year. The Income-tax Law classifies the year as (1) Previous year, and (2) Assessment year.
The year in which income is earned is called as previous year and the year in which the income is charged to tax is called as assessment year.
e.g., Income earned during the period of 1st April, 2017 to 31st March, 2018 is treated as income of the previous year 2017-18. Income of the previous year 2017-18 will be charged to tax in the next year, i.e., in the assessment year 2018-19.