The one year period for which financial statements of a
government or a company is prepared is referred to as the
Accounting year or financial year or fiscal year (FY).
A fiscal year is any 52-week period used consistently by an
organization for the purposes of financial reporting and
policy setting- AS per business dictionary
Countries depending on institutional requirements define their
fiscal year which differs with their calendar year
The fiscal year for individuals and entities to report and pay
income taxes is often known as the taxpayer's tax year or taxable
year.
The current fiscal year was adopted by the colonial
British government in 1867 to align India's financial
year with that of the British Empire.
Prior to 1867, India followed a fiscal year that ran from
1 May to 30 April
In 1984, the LK jha committee recommended adopting
a fiscal year that ran from 1 January to 31 December.
However not approved by government
A panel set up by the NITI Aayog in July 2016,
recommended starting the next fiscal year from 1
January to 31 December after the end of the current
five-year plan
On 4 May 2017, Madhya Pradesh announced that it
would move to a January–December financial year,
becoming the first Indian state to do so. But later it
dropped the idea
Why financial year & calendar year differ in India?
Inheritance from British Rule
Hindu calendar
Revenue cycle in Agriculture
Festivals
The government's financial year runs from 1 April to 31
March.
The financial year also termed as FY in India is
accounted from the April 1st to the 31st March every
year and includes all the monetary and budgetary
decisions taken by the central government.
Most companies follows April 1st to March 31st
financial year
But some companies follows different financial year
Companies following Indian depositary receipts (IDR) can
follow their own financial year
The RBI too follows its own accounting year. As it likes to
present an aggregate picture after all banks come out with
their numbers, its accounting year begins with a three-month
lag and follows a July-June cycle.
Nestle India , Bosch ( January –December )
Gillette ( July-June ),
Bania community- divali to divali (chopadis)
As per section 2(41) of companies Act, 2013 every
Company is required to follow uniform Financial Year
ending on 31st March. Companies following a different FY
were given a transition period of 2 years to comply with the
requirement. It means Company has to comply with this
provision by 31st March, 2016.
If any Company which is holding or subsidiary of a company
incorporated outside India and is required to follow a
different financial year for consolidation of its accounts
outside India, suitable application is to be filed with the
Tribunal.
AY is the assessment year and FY is the financial year. From
an income tax perspective, FY is the year in which you earn
an income. AY is the year following the financial year in
which you have to evaluate the previous year’s income and
pay taxes on it.
The International Financial Reporting
Standards(IFRS) allow a period of 52 weeks as an
accounting period instead of a proper year
The fiscal year begins on 1 April and ends on the 31 March
of the following year. Accounting standards issued by the
Institute of Chartered Accountants of India(ICAI)
Generally, the accounting period consists of 12
months. However the beginning of the accounting
period differs according to the jurisdiction.
4-4-5 calendar method is used in British
and Commonwealth usage and the 52–53-week fiscal
year in the United States. In the United States the
method is permitted by generally accepted accounting
principles(GAAP),
Interestingly the UK itself has a weird date – their financial
begins on 6 April and ends on 5 April.
In some jurisdictions, particularly those that permit tax
consolidation, companies that are part of a group of
businesses must use nearly the same fiscal year
(differences of up to three months are permitted in some
jurisdictions, such as the U.S. and Japan), with
consolidating entries to adjust for transactions between
units with different fiscal years, so the same resources will
not be counted more than once or not at all
1. Usually a period of twelve months for which a
company regularly creates financial statements and
checks inventories.
2. Fiscal year may corresponds calendar year but it’s
not mandatory
3. Short end fiscal year- year that contains less than 12
months
Fiscal year
Year Year
independent dependent
Non calendar e.g. short end
Calendar year
year fiscal year
Can draw up the estimates of Incomes and
expenses
Set out economic goals
Budgetary planning
Easy comparison of data etc.,
