Fiscal Year
A Fiscal Year is a 12-month period used by businesses and governments for accounting, financial reporting, and taxation purposes.
It does not always follow the calendar year (January to December). Instead, it is defined based on how a country or organization structures its financial reporting cycle.
Fiscal Year in India
In India, the fiscal year runs from:
1st April to 31st March
For example, Fiscal Year 2024–25 means the period from 1st April 2024 to 31st March 2025.
This is the period in which income is earned, expenses are recorded, and financial statements are prepared.
What this really means
The fiscal year is the base period for calculating income and taxes.
All income you earn during this period is considered for tax purposes, and your tax return is filed after the fiscal year ends.
It helps in maintaining consistency in financial reporting and taxation.
Fiscal Year vs Assessment Year
This is where many people get confused.
- Fiscal Year (FY) → The year in which income is earned
- Assessment Year (AY) → The year in which that income is assessed and taxed
Example:
Income earned in FY 2024–25 is assessed in AY 2025–26.
Why Fiscal Year is Important
The fiscal year plays a key role in:
- Income tax calculation and return filing
- Preparation of financial statements
- Business accounting and reporting
- Budgeting and financial planning
- Compliance with tax laws
Who Uses Fiscal Year?
- Individuals for income tax filing
- Businesses and companies for accounting
- Government for budgeting and taxation
- Financial institutions for reporting
