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Desirability and Feasibility of Changing the Financial Year

Desirability and Feasibility of Changing the Financial Year
आरंभ करने की तिथि :
Aug 24, 2016
अंतिम तिथि :
Oct 01, 2016
00:00 AM IST (GMT +5.30 Hrs)
प्रस्तुतियाँ समाप्त हो चुके

The Government of India has appointed a Committee chaired by Dr. Shankar Acharya, former chief economic adviser, to examine the desirability and feasibility of having a ‘new ...

The Government of India has appointed a Committee chaired by Dr. Shankar Acharya, former chief economic adviser, to examine the desirability and feasibility of having a ‘new financial year’. Other distinguished members of the Committee are Shri K M Chandrasekhar, former Cabinet Secretary, Shri PV Rajaraman, former Principal Finance Secretary, Tamil Nadu and Dr. Rajiv Kumar, Senior Fellow Centre for Policy Research.

Presently, the financial year followed by governments in India runs from 1st April to the following 31st March.

This issue was last examined by the L K Jha Committee in 1985, whose recommendation to move to a financial year of January 1- December 31 (for Central and State Governments) was then not accepted by the then Government.

There are many arguments for and against the change in financial year which revolve around issues of budget and cash management by government, seasonality of government revenues and expenditure, impact of Monsoon on budget forecasting, working season, timelines involved in the legislative cycle of passage of Budget by the Parliament, international comparability of fiscal statistics, aligning government’s financial year with year for tax assessment and corporate accounting purposes. Some arguments are less on the intrinsic merit or demerit of the change but rather on the timing of the change when the change coincides with other developments impacting businesses.

This Discussion Forum seeks to invite inputs from everyone interested in this issue.

We welcome your comments, suggestions, information and documents on the Committee’s Terms of Reference and issues related to it. Please provide these latest by 30th September, 2016.

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Vijay Pandey_6
Vijay Pandey_6 9 साल 10 महीने पहले
Technically a FY can start from any date of the year provided all government departments including income tax are amending the same in various legislations. The dates which are correlated to the FY also needs to be amended. Obviously in such a case one FY to start such a change has to of a shorter than 365 days. There is no realistic meaning commencing a FY from 01 Jan. In Indian climatic conditions and ritual or customs, in my view a new financial system should commence from 01 October.
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Vikas Patil
Vikas Patil 9 साल 10 महीने पहले
This is a good move. I feel accounting should not only be simple and transparent but also should be easy and understandable by all. The current system of two different years(calendar and financial) doesn't make it easier. Also as an NRI tax-payer, I feel it not so easy to file my taxes; as USA, unlike India, has financial year = the calendar year. Though there is an "Agreement for avoidance of double taxation of income with USA", the diff in financial years makes this treaty less effective.
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Ravindranath_Shenoy
Ravindranath_Shenoy 9 साल 10 महीने पहले
I feel we should change the financial year from April - March , to the calendar year, ie Jan - Dec as early as possible for simplicity .I feel most nations follow the calendar year .The difficulty to change over will only be in first instance .Similarly in the Income tax Act ," previous year " and " assessment year " should both be merged to a single " financial year ".
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ANAND PARKASH AGGARWAL
ANAND PARKASH AGGARWAL 9 साल 10 महीने पहले
ENGINNERS, MBBS AFTER PASSING IAS BECOME TAXATION HEAD HAVING NO KNOWLEDGE OF ACCOUNTS AND TAX. FIRST CHANGE SYSTEM OF RECRUITMENT SO THAT ACCOUNTING PROFESSIONALS COULD HEAD TAX DEPTT.ASSESSMENT YEAR AND FINANCIAL YEAR CREATS CONFUSION FOR A COMMON MAN. LAW SHOULD BE SIMPLE. SEC. 44AA SAYS THAT IF INCOME IS RS. 1.20 LACS BOOKS OF ACCOUNTS ARE MANDATORY WHILE BASIC EXEMPTION LIMIT IS 2.50 LAKHS.SIMPLE PRESENTAION OF LAW IN EFFECTIVE MANNER CAN BE OBSERVED AT WWW.FACEBOOK.COM/PARKASH1.ANAND
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Hemant Jethwani
Hemant Jethwani 9 साल 10 महीने पहले
As the Indian economy grows to be the third largest in the world & as we open for FDI, which inflows continue to grow, it makes sense to integrate with the rest of the world and follow the calendar year, as fiscal year. Jan-Dec. is the most widely used financial year across the developed world. We should adapt the same. Other issues such as, impact of Monsoon on budget forecasting et al are mere apprehensions that will resolve themselves, over time.
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Raghav Garg
Raghav Garg 9 साल 10 महीने पहले
https://en.wikipedia.org/wiki/Fiscal_year There is nothing like Jan to December in US or UK as mentioned by few people. We need to think on our own when is the best time for us according to local needs ,for me it can be October 1 to September 30 Reason : 1) Monsoon would have been completed , we can prepare accordingly on Taxes/Tariffs. 2) Individual will get 3 month after September 30 , they can complete all formalities for tax payments before dec 31.
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Ratikanta Panda
Ratikanta Panda 9 साल 10 महीने पहले
Yes, a new financial year is required due to following reasons. 1. Right now, the effective finance year is October to March as due to weather exigencies the 2nd quarter expenditure remains low. 2. Whenever, the financial year starts, the budget including both finance and appropriation bill should be ready prior to that. 3. Vote on account should be removed and that time should be spent with other bills. 4. It will avoid a lot of confusion. However, there would be challenges for first year.
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