If you’re a small business owner in India—say a local bakery, a mobile repair shop owner, or a tuition teacher—you might have come across terms like fiscal year-end, calendar year, and financial reporting periods when dealing with income tax, GST or opening a business bank account. And let’s be honest, they can be confusing.
You might ask:
- Does my business have to follow January to December?
- What if I want to close my books after the Diwali rush or wedding season?
- Will my taxes get affected if I change my year-end?
Don’t worry. In this guide, I’ll explain everything.
What Is a Fiscal Year?
A fiscal year is a 12-month period that a business or government uses for keeping accounts, preparing budgets, and filing taxes. It doesn’t have to start on January 1st like the calendar year.
In India, the official fiscal year runs from 1st April to 31st March of the following year. This is used by most businesses, government departments, and taxpayers.
Imagine you’re a mobile repair shop owner. You don’t just track your income and expenses randomly—you need a fixed time frame to compare performance, plan for growth, and file taxes. That’s your fiscal year.Let’s say your business earned ₹10,00,000 between 1st April 2024 and 31st March 2025. All your income tax returns, GST filings, and balance sheets for Financial Year 2024–25 will be based on this period.
What Is a Calendar Year?
A calendar year is simply the 12-month period that starts on 1st January and ends on 31st December.
While the Indian tax system is based on the fiscal year, many global companies or MNCs (multinational corporations) use the calendar year for international reporting.
For example, Facebook or Amazon use the calendar year (Jan–Dec) globally, but when they file taxes in India, they still follow the Indian fiscal year (April–March).
Example
Ravi, a local two-wheeler mechanic in Pune, earned most of his income during the festive season (October–December). However, for tax purposes, his profits from April to March will be counted. That’s his fiscal year.
If Ravi chooses to analyze his profits using the calendar year (Jan–Dec), it’s fine for personal analysis. But for filing Income Tax Return in India (ITR) or to file GST returns online, he must follow the April–March fiscal cycle.
In India, Income Tax Returns (ITR) are filed based on the fiscal year, not the calendar year—even if your business earns mostly during Diwali or the New Year season.
The Indian government finalizes its Union Budget in February so that new rules are in place before the new fiscal year begins on April 1st.
Why Do Some Businesses in India Prefer a Different Fiscal Year?
While India’s default fiscal year is April to March, certain businesses—especially those with seasonal income—might internally track their performance using different 12-month periods. This helps them understand their real profits better.
Not all businesses earn evenly throughout the year. For example:
- A home tutor might earn more during school term times (June–March).
- A mobile shop may see high profits during Diwali and New Year.
- A resort owner in Goa earns the most revenue from October to February (tourist season).
If such businesses only looked at the April–March numbers, it might not give a clear picture of actual performance or growth.
How Does This Work in Practice?
While government rules for taxes and filings (like GST and ITR) are fixed to the April–March fiscal year, business owners can use any 12-month period for internal planning.
Here’s a quick comparison:
| Business Type | Peak Season | Preferred Internal Fiscal View | Legal Tax Filing Period (India) |
| Retailer in Delhi | Oct–Dec (festive) | Jan–Dec (calendar year) | April–March (fiscal year) |
| Tuition teacher in Jaipur | July–March (academic) | July–June (school year) | April–March (fiscal year) |
| Pool installer in Chennai | April–June (summer) | April–March (natural match) | April–March (fiscal year) |
Even if they track performance on a different schedule, all tax filings in India must still match the April–March cycle.Your internal accounting year can follow your business season, but when it comes to taxes like how to file GST returns online in India, you must still report according to the April–March fiscal year.
Fiscal Year vs. Calendar Year: Which Is Better for Indian Businesses?
Why Fiscal Year (April 1 – March 31) Work Well in India?
This is the standard in India for:
- Income tax return filing (ITR)
- GST return filing
- TDS calculations
- Financial statements for banks or investors
Since government reporting systems (like the Income Tax Portal and GSTN) are built around the fiscal year, sticking with this helps you stay compliant easily.
Example: Meena, a boutique owner in Hyderabad, needs a loan. The bank asks for her Income Statement (profit and loss statement) for FY 2023–24. Because her books follow the fiscal year (April–March), she’s able to submit the documents quickly without confusion.
Why Some Use Calendar Year (January 1 – December 31) Internally?
- Easier for personal planning
- Matches global partners or customers (especially if you’re an exporter)
- Aligns better with some seasonal cycles
But remember—you still need to file your taxes based on April–March in India.
Example: Raju, who installs air conditioners in Kolkata, tracks his income from January to December to align with the summer demand and monsoon slowdown. But while budgeting that way helps, he still files ITR for FY 2023–24 (April–March).
Comparison Table
| Feature | Fiscal Year (Apr–Mar) | Calendar Year (Jan–Dec) |
| Used for Indian tax filing | Yes | No (not accepted by Income Tax Dept.) |
| Aligns with the Indian govt. policies | Yes | No |
| Good for seasonal planning | Yes | Yes |
| Easier to compare with global companies | Not always | Yes |
| Preferred for personal expense planning | Not ideal | Yes |
Even if your business is small (like a local kirana store), banks and NBFCs often ask for financials based on the fiscal year if you’re applying for a business loan. If you work with international clients (say you’re a freelance graphic designer in Bengaluru), you can track your income in calendar years for personal review, but file taxes in fiscal years.
How to File Taxes Based on the Fiscal Year in India
In India, all tax filings—whether for individuals, partnerships, or companies—follow the fiscal year (1st April to 31st March). This applies to:
- Income Tax Returns (ITR)
- GST returns
- TDS returns
- Audit reports
Even if you maintain your books in a different format or cycle internally, your official filings must be in sync with the government’s fiscal year.
Key Tax Filing Deadlines (For FY 2024–25)
| Return Type | Entity Type | Due Date (if not extended by CBDT.) |
| Income Tax Return (ITR-4) | Proprietors, freelancers | 31st July 2025 |
| Tax Audit (if applicable) | Businesses above turnover limit | 30th September 2025 (tax audit report) and 31st October 2025 (ITR) |
| GST Return (GSTR-3B) | Monthly filers | 20th of following month |
Note: Dates may shift if the government extends deadlines. Keep an eye on incometax.gov.in and gst.gov.in.
How It Works in Real Life
Let’s say Anjali, who runs a homemade food business in Nagpur, earns ₹7.5 lakhs between April and March. Here’s what she’ll do:
- Maintain simple records of income and expenses month-wise.
- Use ITR-4 to file her tax return by 31st July of the assessment year, since she’s under the turnover threshold limit and eligible for presumptive taxation.
- If she’s registered under GST (say, because she supplies to offices), she’ll file GST Returns.
Many people confuse “assessment year” and “financial year.” For example, FY 2024–25 means income earned between April 2024 and March 2025, but it’s assessed in AY 2025–26.
How the Fiscal Year Affects Business Strategy and Planning in India
Your fiscal year isn’t just a tax term—it plays a big role in:
- Planning your business cash flow
- Preparing for tax payments and deductions
- Applying for loans or investments
- Timing big expenses or expansions
Knowing when your fiscal year starts and ends allows you to make strategic decisions, like when to make large purchases or push marketing campaigns.
Getting Loans or Attracting Investors
Whether you’re a mobile shop owner or run a tailoring business, banks and lenders will ask for 2–3 years of financial statements, prepared as per the fiscal year. If your books are mismatched or not aligned with the April–March cycle, you might face delays in loan approvals.
Example
Sahil, a freelance app developer in Bengaluru, applies for a business loan. The bank officer asks for financial statements for FY 2021-22, FY 2022–23 and FY 2023–24. Since Sahil keeps proper fiscal year books, the process moves smoothly.
If you plan to grow or sell your business later, buyers and investors will expect your books in fiscal year format. This makes due diligence much easier.
Indian startups applying for government schemes like Startup India or MUDRA loans must submit financials in fiscal year format—April to March.
Here are the different names used for the fiscal year in India, depending on the context:
| Name/Term | Meaning / Usage | Example |
| Fiscal Year (FY) | General term used in budgeting, taxation, and accounting | FY 2024–25 |
| Financial Year | Used in tax filing, company audits, and official government use | Financial Year 2024–25 |
| Assessment Year (AY) | Used in Income Tax; the year after the income was earned | AY 2025–26 (for income in FY 2024–25) |
| Previous Year | Used in tax language; the year in which income was actually earned | Previous Year 2024–25 |
| Accounting Year | Used by companies for bookkeeping and balance sheet preparation | Accounting Year 2024–25 |
Fiscal Year Duration in India
It starts on 1st April and ends on 31st March of the following year.
For example:
- FY 2024–25 = 1 April 2024 to 31 March 2025
- AY 2025–26 = Used for filing tax returns based on income earned in FY 2024–25
Example for Taxpayers and Businesses
| Activity | Relevant Year Term | Example |
| Income earned and reported | Previous Year | FY 2024–25 |
| Tax return filed for that income | Assessment Year | AY 2025–26 |
| Business records maintained | Accounting Year | FY 2024–25 |
Think of it like a school year:
- The year you attend school is like the Previous Year or Financial Year.
- The next year, when your report card is made and submitted, is the Assessment Year.
Key Points to Remember
- India’s official fiscal year is from April 1 to March 31. All government-related filings like Income Tax Return (ITR), GST returns, or applying for business loans must follow this format.
- You can track your business performance using a calendar year (Jan–Dec) if it helps with seasonal planning, but your legal tax and accounting reports must be fiscal-year based.
- Income tax, GST, TDS, audits, and business loan documents are all aligned to the fiscal year. Keep your books that way to avoid hassles.
- Use the fiscal year to your advantage! Time your income and expenses smartly—you can reduce taxes, manage cash better, and impress lenders or investors.
You don’t need fancy software to follow the fiscal year. A simple Excel sheet with monthly income and expense columns (starting from April) works for most small businesses.
Conclusion
The choice between a fiscal year and a calendar year can feel complicated at first, but once you understand your business’s rhythm, it becomes simple. Whether you’re a mechanic, baker, teacher, or online seller, you should choose the timeline that makes reporting and planning easier—just make sure you also follow Indian tax regulations. So, take a good look at your business cycle, and speak to a local accountant if needed. The right fiscal year choice can make your financial life smoother, your taxes clearer, and your planning smarter.
