What is the Financial Year as per Income tax Act. If a company changes the financial year from 12 months to 15 months then what is the implication in Incoem Tax.?
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Financvial Year under Income Tax
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No , there is no such provision in the I T Act . The return under the IT Act is to be filed for financial year .The technical term for financial year in the I T Act is Previous Year.The previous year is defined under Section 3 of I T Act .
Sec 3. For the purposes of this Act, previous year means the financial year immediately preceding the assessment year :
Provided that, 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 previous 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."
Provided that, 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 previous 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."
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Prior to assessment year 1989-90 asssses were ata liberty to adopt any previous year lik july - june year or august - july year or any other period
How ever with effect from AY 1989-90 onwards the uniform PY conceot has been introduced whereby all are requied to follow financial year as the previous year for the purpose of ITax Act.
The period of 12 months commencing on the 1st day of april every year is known as the ASSESSMENT YEAR as defined in section 2(9)
An assessment year is a financial year which immediately succeeds the relevant previous year .
Eg; for the previous year 2008-09 the relevant assessment year is 2009-10
for the assessment year 2008-09 the relevant previous year is 2007-08
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