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Financial Year

What is the Financial Year (FY)?

A Financial Year (FY), or a Fiscal Year, is the period when companies worldwide prepare their balance sheets and income statements. The duration of the financial year varies among nations. In India, the financial year starts on April 1st and ends on March 31st. It represents the period in which income is earned. After the end of the financial year, companies file their income tax returns and pay taxes in the next year, known as the Assessment Year (AY).

What is India’s current financial year?

India’s current financial year, or fiscal year, started on 1st April, 2024 and will end on 31st March 2025. During these 12 months, companies in India will prepare financial statements of their business operations and other activities.

What is the significance of the financial year?

In India, the financial year is the period that the government uses it to estimate its total income and expenditure, set financial and economic goals, and prepare the action plan for the Budget. It is also a time when companies assess their incomes and profits.

How is the financial year different from the calendar year?

The key differences between financial and calendar years are listed below:

Characteristics Fiscal Year Calendar Year 
Definition It starts on April 1st and ends on March 31st . It starts on January 1st and ends on December 31st. 
Significance Used for accounting, taxation, and budgeting. Useful in performing daily activities. 
Business Cycles It aligns with business cycles. It aligns with natural year cycles. 
Government relevance Used for budget planning and allocation. Used for administrative purposes and holidays. 
International alignment May not align with international norms. Aligns with the Gregorian calendar and international standards. 

Is the financial year the same for all countries?

No, the financial year is not the same for all countries. Here is a list of a few countries with their financial year:

Fiscal Year Countries 
1st April to 31st March India, New Zealand, Japan, Kuwait, Qatar, Singapore, South Africa, etc. 
1st July to 30th June Australia, Bangladesh, Bhutan, Kenya, Mauritius, Pakistan, Uganda, etc. 
1st October to 30th September Haiti, Myanmar, Thailand, Trinidad and Tobago, United States, etc. 
16th July to 15th July Nepal 
21st December to 20th December Afghanistan 
21st March to 20th March Iran 
6th April to 5th April United Kingdom 
1st January to 31st December Argentina, Austria, Brazil, China, Cuba, Ecuador, France, Germany, etc. 

What are the consequences of missing financial year-end deadlines?

Companies that fail to comply with the financial year-end deadlines are subjected to the following penalties under Section 137 of the Provisions of Companies Act, 2013:

  • Penalty of ten thousand rupees and further penalty of one hundred rupees for each additional day up to a maximum of two lakh rupees.
  • The Chief Financial Officer or Managing Director shall be liable for the same up to fifty-thousand rupees.

Taxpaying individuals are subjected to the following penalties under the Income Tax Act:

  • A person with an unpaid tax balance who does not file an ITR will be subjected to an outstanding interest of 1% per month.
  • On filing ITR post the deadline, if the income is more than Rs. 5,00,000 per annum, he/she shall be charged with Rs. 5,000 before the 31st of December of AY; Rs. 10,000 if submitted after the 31st of December but before the 31st of March of the AY.
  • If someone neglects to file the ITR or underreports their income, they will be charged 50% of the total taxes due on the unfiled income.
  • If a person fails to submit TDS and TCS returns by the deadline, they will be charged Rs 10,000 to 10,00,000 in addition to late filing penalty of Rs. 200 per day until the TDS/TCS is paid.
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