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What is Previous Year in Income Tax
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The previous year meaning in income tax is the financial year preceding the assessment year. The assessment year is the year immediately following the previous year, during which the income earned in the previous year is assessed and taxed.
What Do You Mean by Previous Year in Income Tax?
For instance, if the current assessment year is 2023-24, then the previous year would be 2022-23.
The income earned during the previous year is assessed for tax purposes in the assessment year. This includes income from various sources such as salary, business or profession, capital gains, house property, and other sources like interest on savings, dividends, etc.
Individuals and entities are required to file their income tax returns for the previous year during the assessment year.
Understanding the previous year is crucial for taxpayers to compute their taxable income accurately. They need to maintain records of their financial transactions, receipts, and expenditures for the relevant previous year to ensure compliance with the income tax laws.
Additionally, taxpayers need to be aware of any changes or amendments made to the income tax provisions applicable for the particular previous year.
Furthermore, tax planning strategies often revolve around the previous year's income and deductions. Taxpayers may engage in various tax-saving investments and expenditures to minimize their tax liability for the previous year.
These could include investing in tax-saving instruments like Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), National Savings Certificate (NSC), or claiming deductions under Section 80C for expenses such as tuition fees, life insurance premiums, etc.
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Authors Of The Question
What is Previous Year in Income Tax?
priti
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1 Answers
8 months
2024-04-23T19:42:42+00:00 2024-06-26T15:59:15+00:00Comment
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