Table of Contents
BASICS
- January 1st marks the beginning of a brand new year For the government, many businesses, investors and taxpayers in India, it is the year beginning from April 1 that matters.
YEAR END ACTIVITIES LIKE
- Closing of books of account , Advance Tax Payment, Computation of Tax, Service Tax Dues payment, Investments to Save Tax as per the Tax Las Provision, TDS Calculation and payment, Counting of Physical Inventory and verifying with books, Confirmation of Customer and Vendor Outstanding balance., Computation of Capital Gain and losses, Repayment of Housing loan, Tax Planning, Manage Professional Income & Expenses, Deposit in FD, PPF, LIC as per the Income Tax Provision to save tax, Filing of Belated Income Tax Return, Account for Unabsorbed Business Losses, Closing of Financial Year, Paying Taxes, Settling of all books
UNION BUDGET OF INDIA
- The Government presents it on the first day of February so that it could be materialized before the commencement of new financial year in April. The budget, which is presented by means of the Finance bill and the Appropriation bill has to be passed by both the Houses before it can come into effect from April 1, the start of India’s financial year
WHAT YOU SHOULD KNOW
- The 12-month period from April 1 to March 31 is widely accepted as the accounting/fiscal/financial year in our country. This was adopted by the British government in 1867 to align India’s financial year with that of the British Empire. Other British colonies such as Hong Kong and Canada too follow the April-March routine. Prior to 1867, India’s fiscal year ran from May 1 to April 30.
ACCOUNTING OR FINANCIAL YEAR
- India – 1 April – 31 March Australia – 1 July – 30 June China – 1st January to 31st December Japan – 1 April – 31 March Pakistan -1 July – 30 June United States – 1 October – 30 September United Kingdom – 6 April – 5 March (In the UK the financial year began on April 1, 2018, and runs until March 31, 2019, for the purposes of government working out their finances. For personal tax purposes, the fiscal year starts on April 6 and ends on April 5 of the next calendar year.) BRIEF HISTORY ACCOUNTING YEAR IN INDIA Most companies and businesses in India follow the April to March accounting cycle that syncs with the fiscal year of the government. But some companies follow a different cycle. For instance, Nestle India follows a January to December accounting year while Gillette India’s financial year ends on June 30. Many corporate realigned to April-March recently after new Companies Act called for a uniform financial year.
THE RBI TOO FOLLOWS ITS OWN ACCOUNTING 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.
CHRONOLOGY OF EVENTS IN RBI
WHY IS THE SIGNIFICANCE OF ACCOUNTING YEAR?
- The income earned in one accounting year (called the previous year) is subject to tax in the following accounting year (called assessment year). • The accounting year is the time period for which governments draw up the estimate of income and expenditure for the country/state. • It is the period for which the government sets out its financial and economic goals and lays down the means to raise funds for the same.
PROPOSAL TO CHANGE INDIA’S FINANCIAL YEAR TO JAN – DECEMBER
- The government, in May last year (2017), was reported to have initiated the spadework for shifting the financial year to January, from April, to align it with the agriculture production cycle. Prime Minister Narendra Modi had backed the idea of the January-December financial year while addressing chief ministers at the Governing Council of NITI Aayog in April 2017. The idea was dropped after some states objected to it
THE IDEA OF CHANGE
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- The government in 2015 appointed a high-level committee to study the feasibility of shifting financial year to January 1 from the current practice of starting the fiscal from April 1. The panel submitted its report to the Finance Minister in December, reasoning for the change and its effect on the different agricultural crop periods and its impact on businesses, the taxation system and procedures, statistics and data collection. GOI had appointed a committee headed by former Chief Economic Advisor Shankar Acharya to analyse the Niti Aayog’s recommendation of shifting the financial year from April-March to Jan-Dec. DELOITTE SURVEY 84% Indians feel that fiscal year should be changed to calendar year
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