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Its the period of 12 months commencing on 1st april

every year and ending on 31st march of the next year. Income of previous year of an assessee is taxable during the following assessment year at the rates prescribed by the relevant finance act.

Income earned in a year is taxable in next year.
The year in which income is earned is known as

previous year. P.Y. is the financial year immediately preceding the A.Y. . From the A.Y. 1989-90 onwards ,all the assessees are required to follow financial year(i.e. apr 1 to march 31) as P.Y. .This uniform P.Y. has to be followed for all sources of income.

In case of newly setup business ,the first P.Y.

commencing from the date of setting up of business and ending on immediately falling 31st march.

PERSON sec 2(31)

Income tax is charged on income of the P.Y. of every

person. The term person includes: an individual: a natural human being i.e. male, female , minor or aperson of sound or unsound mind. a HUF: it consists of all persons lineally descended from a common ancestor and includes their wives & unmarried daughters.

a company
A firm : partnership firm whether registered or not. An AOP or BOI whether incorporated or not.

A local authority: municipal committee, district board

etc. Every artificial,juridical person not falling in any of the above category.

ASSESSEE sec 2 (7)

Every tax payer is an assessee.Assessee means a person by whom any tax or any other sum of money is payable under the act.

INCOME sec 2 (24)

Income is a periodical monetary return with some sort of regularity.It may be recurring in nature.It may be broadly defined as the true increase in the amount of wealth,which comes to a person during a fixed period of time. It includes: 1. Profits and gains.

2.Dividend. 3.Voluntary contribution received by trust. 4.Perquisites in the hands of employee. 5.City Compensatory allowance/dearness allowance 6.Capital gains. 7.Insurance profit. 8.Banking Income. 9.Winning from lottery. 10.Employee contribution towards PF.

Amount received under keyman insurance policy. Amount exceeding Rs.50000 by way of gift received by an individual or a HUF.


It is a general concept that before computing the total income the GTI has to be calculated .Income of a company is computed under 4 heads: Income from House property. Profits and gains of business and profession Capital Gains. Income from other sources.

In other words GTI means total income computed before making any deduction u/s 80 c to 80 u.