Financial Year (FY)
India's tax and accounting year, running from 1 April to 31 March, rather than the January to December calendar year used in many other countries.
In short
- Runs 1 April to 31 March. FY 2026-27 means 1 April 2026 to 31 March 2027.
- The new financial year starts on 1 April; the old one ends on 31 March.
- Almost every Indian compliance deadline is anchored to this cycle.
- Called the 'previous year' in the old Income Tax Act, 1961.
- The Income Tax Act, 2025 replaces that label with a single 'tax year' for the same period.
The financial year is the twelve-month accounting and tax period that Indian tax law, company law, and business accounting are built around. It runs from 1 April to 31 March, so a financial year always straddles two calendar years and is written with both: FY 2026-27 means 1 April 2026 to 31 March 2027. The new financial year begins on 1 April and the outgoing one closes on 31 March.
India is not unusual in avoiding the calendar year, though the specific dates differ by country: the United Kingdom's tax year for individuals ends in early April, Australia's runs July to June, and the United States uses the calendar year for individuals. What matters practically is that a business operating across borders will often be reconciling two different year-ends.
Nearly every compliance obligation in India is anchored to this cycle. Income tax returns, advance tax instalments, TDS deposits and returns, GST annual returns, ROC filings, and statutory audits all take their timing from the 1 April to 31 March window. This is why year-end activity in India concentrates so heavily in March rather than December: investment declarations are finalised, tax-saving investments are made before the 31 March cut-off, books are closed, and stock is counted.
In everyday use, 'accounting year' and 'fiscal year' are used interchangeably with financial year, and for most purposes that is harmless. Company law does define a financial year formally for the purposes of preparing accounts, with limited exceptions permitted for companies that are subsidiaries or holding companies of foreign entities needing a different year-end for consolidation.
There is a terminology change worth knowing. Under the Income Tax Act, 1961, the year in which income was earned was called the 'previous year', and it was assessed in the following 'assessment year', a one-year lag that confused nearly everyone outside the profession. The Income Tax Act, 2025, effective 1 April 2026, collapses that into a single 'tax year' referring to the same 1 April to 31 March period. The period itself has not moved. Only the label has.
Also referred to as: FY, fiscal year, accounting year, previous year, tax year.
Frequently asked questions
When does the financial year end in India?
31 March. The next financial year begins the following day, on 1 April. So FY 2026-27 runs from 1 April 2026 to 31 March 2027.
When does the new financial year start?
1 April every year. This is why tax-saving investments, investment proof submissions, and book closing all cluster in the last weeks of March, ahead of the cut-off.
Is the accounting year the same as the financial year?
In ordinary Indian usage, yes: accounting year, fiscal year, and financial year all refer to the 1 April to 31 March period. Company law defines a financial year formally for preparing accounts, with limited exceptions for companies that need a different year-end to consolidate with a foreign parent or subsidiary.
What is the difference between financial year and assessment year?
The financial year is when you earn the income. The assessment year is the following year, in which that income is assessed and the return is filed. Income earned in FY 2025-26 is assessed in AY 2026-27.
Does the Income Tax Act, 2025 change the financial year?
No. The period is still 1 April to 31 March. What changes is the vocabulary: the new Act uses a single 'tax year' label instead of splitting the concept into 'previous year' and a separate 'assessment year' a year later.
Disclaimer
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.