Quick Summary
Financial Year is the period from April 1 to March 31 in which income is earned. It is also called the Previous Year for tax assessment purposes.
Financial Year (FY) in India runs from April 1 to March 31. It is the period during which you earn income from salary, business, investments, and other sources. For example, FY 2024-25 refers to the period from April 1, 2024 to March 31, 2025.
Financial Year for Different Entities
- Individuals: April 1 to March 31 (same for all)
- Companies: Generally April 1 to March 31, but can choose different year with approval
- LLPs/Partnerships: April 1 to March 31
- Trusts: Generally April 1 to March 31
Why April to March?
India inherited this system from the British colonial period. The Budget is presented in February, allowing time for changes to take effect from April 1. This aligns with the agricultural cycle and government accounting.
Key Activities During Financial Year
- Earning salary, business income, and investment returns
- Making tax-saving investments under Section 80C-80U
- Paying advance tax on specified due dates
- Maintaining books of accounts
- TDS deductions by employers and payers
Key Points
- Runs from April 1 to March 31
- Also called Previous Year for tax purposes
- Income earned during FY is assessed in the following AY
- Budget is presented in February before the new FY begins
- Tax planning and investments are done during the FY
- TDS is deducted throughout the FY