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Previous Year vs. Assessment Year: Know the Difference

Shumaila Saeed
By Shumaila Saeed || Published on January 21, 2024
The "Previous Year" is the fiscal year in which income is earned, while the "Assessment Year" is the following fiscal year in which the income is assessed and taxed.
Previous Year vs. Assessment Year

Key Differences

The term "Previous Year" refers to the financial year in which income is earned or accrued. Conversely, the "Assessment Year" is the period following the previous year, during which this income is evaluated for tax purposes.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024
In the context of taxation, income from the Previous Year is subject to tax in the Assessment Year. This means that tax returns filed in the Assessment Year report income from the Previous Year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024
The Previous Year is crucial for determining the amount and nature of income to be taxed. The Assessment Year, however, is when the tax liability is calculated and taxes are paid or refunded based on this income.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024
For clarity, if the Previous Year is 2022-2023, the Assessment Year would be 2023-2024. This timeline shows the sequential relationship between the two terms.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024
Both terms are fundamental in tax planning and compliance. The Previous Year focuses on income generation, while the Assessment Year is oriented towards tax assessment and compliance.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024
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Comparison Chart

Time Frame

Year in which income is earned
Year following the Previous Year
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Shumaila Saeed
Jan 21, 2024

Relevance in Taxation

Income generation period
Income assessment and taxation period
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Shumaila Saeed
Jan 21, 2024

Tax Return Filing

Income of this year reported next year
Tax returns filed for Previous Year
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Shumaila Saeed
Jan 21, 2024

Example Period

If 2022-2023, then it's the Previous Year
If 2023-2024, then it's Assessment Year
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Shumaila Saeed
Jan 21, 2024

Primary Focus

Earning and accruing income
Calculating and paying tax on income
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Shumaila Saeed
Jan 21, 2024
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Previous Year and Assessment Year Definitions

Previous Year

The year before taxes are assessed.
All investments made in the Previous Year will affect my taxes.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Assessment Year

The period for tax assessment and payment.
My tax calculations are due in the current Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Previous Year

The fiscal year before the current Assessment Year.
For the 2023-2024 Assessment Year, the Previous Year was 2022-2023.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Assessment Year

Year for tax compliance and adjustments.
Any tax refunds or dues are settled in the Assessment Year.
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Shumaila Saeed
Jan 08, 2024

Previous Year

Period used for calculating annual income.
My business profits rose substantially in the Previous Year.
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Shumaila Saeed
Jan 08, 2024
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Assessment Year

The fiscal year following the year in which income is earned.
For the 2023-2024 Assessment Year, I will file tax returns for the Previous Year.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Previous Year

The base year for tax calculation.
I relocated for work in the Previous Year, impacting my tax residency.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Assessment Year

Year in which tax returns are filed.
The Assessment Year is when I declare all my earnings from the Previous Year.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Previous Year

The year in which income is earned.
I earned significant rental income in the Previous Year.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Assessment Year

Timeframe for evaluating taxable income.
Deductions claimed will be evaluated in this Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 08, 2024

Repeatedly Asked Queries

Is income taxed in the Previous Year or Assessment Year?

It's taxed in the Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

How is the Previous Year relevant for tax planning?

It's crucial for recording and understanding annual income.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

When do I report income from the Previous Year?

During the Assessment Year.
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Shumaila Saeed
Jan 21, 2024

Can income from two Previous Years be clubbed?

No, each Previous Year's income is assessed separately.
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Shumaila Saeed
Jan 21, 2024

Can I file tax returns for two Assessment Years together?

No, each Assessment Year is independent.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Can I revise tax returns of the Previous Year?

Yes, during the Assessment Year, subject to rules.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

What happens in the Assessment Year?

Income is assessed, and taxes are calculated and paid.
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Shumaila Saeed
Jan 21, 2024

How do I prepare for the Assessment Year?

By maintaining accurate records of the Previous Year's income.
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Shumaila Saeed
Jan 21, 2024

Are tax deductions considered in the Previous Year?

Deductions are claimed for the Previous Year's income in the Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

What is the Assessment Year?

The fiscal year following the Previous Year, for tax assessment.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

What is the Previous Year in tax terms?

It's the fiscal year in which income is earned.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Is Assessment Year the same as the financial year?

It follows the financial year in which income was earned.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Does the Assessment Year affect tax rates?

Tax rates are determined for each Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

How does the government use Assessment Year data?

For evaluating tax compliance and revenue collection.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

What if I miss reporting an income in the Previous Year?

It should be reported in the next Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Is advance tax paid in the Previous Year or Assessment Year?

It's paid in the Assessment Year based on the Previous Year's income.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

What if I earn foreign income in the Previous Year?

It should be reported in the Assessment Year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Do tax benefits apply to the Previous Year or Assessment Year?

Benefits are claimed in the Assessment Year for the Previous Year's income.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Are financial investments counted in the Previous Year?

Yes, they are considered for that fiscal year.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

Can I carry forward losses to the next Previous Year?

Certain losses can be carried forward, impacting future assessments.
Shumaila Saeed
Shumaila Saeed
Jan 21, 2024

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Shumaila Saeed
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Shumaila Saeed
Shumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.

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