As per section 2(9) of the Income Tax Act, 1961 (for short ‘the Act’), the definition of assessment year is given as follows:
“assessment year” means the period of twelve months commencing on the 1st day of April every year.
While the definition, as per section 2(34) of the Act, of the previous year is given:
“previous year” means the previous year as defined in section 3.
Section 3 of the Act defines previous year as follows:
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.
There is focus of the recent governments to change the names related to or kept by British government to Indian origins/ names for example the name of financial capital of India Bombay was changed to Mumbai(on the name of the goddess Mumbadevi) and change in names of many other places of national importance are being done and are proposed to be done. In the same line, the name of famous Bombay VT station was changed to Chhatrapati Shivaji Terminus. The names of big cities like Madras and Calcutta have been changed to Chennai and Kolkata, respectively.
Also, there is focus of the present government to remove the hurdles faced by public in the government workings for example the red lights at the motor vehicles of the officials of the government departments, etc. have been removed as per change in the law in this respect.
Government of India is thinking of change of Financial Year(April to March) to Calendar Year(January to December). Prime Minister, Mr. Narendra Modi has given a proposal in this respect in a NITI Aayog’s meeting. If this is done, it will close the chapter of Financial Year of April to March introduced by Britishers, 150-year ago. However, many advanced countries for example Japan, United Kingdom, Canada, New Zealand, Hong Kong follow Fiscal Year of April to March, every year. Introduction of Calendar Year in India as Financial Year may bring operational problems in first year, therefore, it will be advisable to bring the necessary changes, information in this respect about 6 months ago before bringing the legislation to this effect.
Similarly, there is an urgent need to make Financial Year and Assessment Year as the same in the Income Tax Law. In the other government departments, assessment year and financial year remains the same. This difference creates many problems to assessees as well as officers, appellate authorities, etc. Whenever, there is a change for an assessment year, general public treats the same as of the Financial Year. For example, when a change is proposed from assessment year 2018-19, which will practically relate to Financial Year 2017-18, commoner may take its effective year from 2018-19.