July 17, 2025
4 mins read
In India, the financial year starts in April and ends in March. If you've ever been in a hurry to make an investment or find old bank records in April, you've felt the weight of this year, even if you didn't know what it was called.
The Indian fiscal year goes from April 1 to March 31. People, businesses, and governments use it to figure out their income, keep track of their spending, and file their taxes. The rhythm for businesses is budgeting, audits, and putting together yearly reports. It's when tax planning becomes very important for people, and those last-minute deductions can make a difference.
If you know how the financial year works, you can avoid stress, avoid fines, and keep your funds in better shape, whether you work for yourself, get paid a salary, or run a business.
If you’ve ever rushed to make an investment before March ends or dug through old bank statements in April, you already know the financial year isn’t just a calendar term — it shapes how you plan, spend, and even borrow money.
Tax planning with purpose — Choosing where and when to invest can save you a lot under provisions like Section 80C, 80D, and others. The earlier you plan, the less stressful the year-end scramble becomes.
Staying compliant — Submitting your income details on time isn’t just a rule; it’s how you avoid unnecessary penalties and keep your tax record clean.
Keeping your finances clear — Annual records of your income, expenses, and savings give you a clear picture of your money habits — and where you can improve.
Building creditworthiness — Lenders almost always review your last financial year’s records before approving loans or credit cards. A strong record can open more doors.
Shaping national policy — Your financial year data doesn’t just matter to you; it feeds into the Union Budget and influences how the government allocates resources.
When you get your pay taxed, the year after the financial year is called the assessment year, or AY.
If you make money and owe tax, you fill out an ITR (Income Tax Return).
What is TDS? It's tax that is taken out of your pay before you get it.
Form 16 is a document that your company gives you that shows how much TDS was taken out of your pay.
Section 80C lets you deduct up to ₹1.5 lakh from your taxes for certain assets.
Capital gains are the money you make when you sell things like stocks or real estate.
Permanent Account Number (PAN): This is your unique number for all banking transactions.
If a business is registered for GST, it must file a GST report.
Country | Financial Year Duration | Notes |
China | April 1 – March 31 | Standardised for individuals and businesses |
USA | October 1 – September 30 | Applies to the Federal government; individuals follow the calendar year |
UK | April 6 – April 5 (next year) | Based on the historical tax year method |
New Zealand | July 1 – June 30 | Aligned with seasonal patterns in the Southern Hemisphere |
Japan | April 1 – March 31 | Same structure as India |
India | April 1 – March 31 | Standardised for both individuals and companies |
If you’ve ever scrambled in late March to put money into a PPF or ELSS, you’ve already experienced how tightly the financial year and tax planning are connected. Timing really is everything here.
Last-chance investments — Any eligible investment you make before 31 March counts for that year’s tax deductions. Miss that date, and the benefit shifts to the next year.
Tax-saving eligibility — Contributions to schemes like PPF, ELSS, or life insurance during the financial year can earn you deductions under Section 80C.
Capital gains tracking — If you sell assets such as property or shares, the date of sale decides which year’s tax return it falls under.
Linked deductions — Benefits on health insurance premiums, home loan interest, or education loan interest are tied to the year in which you make the payment.
Being aware of these cut-offs can save you both money and stress — and it’s often the difference between a well-planned year and a rushed, last-minute dash.
Additional Read: Assessment Year and Financial Year
The word "Assessment Year" may sound official, but it just means the year after the financial year. This is when the tax on your earnings from the previous year is calculated. It's there to make sure everything is fair, clear, and organised.
Employers need time to send out Form 16 and banks need time to complete your interest information, so the assessment happens after the end of the financial year.
Taxpayers are given breathing room—this gives you time to gather papers, check your investments again, and make sure you've claimed all of your allowable deductions.
Government processing that works quickly and easily—Allows for regular checks, reports, and closer looks at tough cases without rushing the process.
Financial Year (FY) is the year when income is accrued, and Assessment Year (AY) is the subsequent year when income is assessed and is charged a tax by the government.
Criteria | Financial Year (FY) | Assessment Year (AY) |
Definition | The year when money is earned | The year when money is assessed |
Duration | 1st April – 31st March | Next 1st April – 31st March |
Usage | Income recording and reporting | Tax assessment and filing |
Example (2023–24) | Income earned from Apr ‘23 – Mar ‘24 | Assessed during Apr ‘24 – Mar ‘25 |
The Financial Year is a pillar of Indian taxation and economy. It dictates the way income is traced, taxes computed, and investments organised. Unlike the Assessment Year, it helps bring transparency and sanity in the financial reporting of both individuals and businesses.
Being aware of the consequences of the Financial Year would enable taxpayers to decide wisely, avail the maximum deductions, and keep abreast with the legal requirements. With the changing fiscal laws and the ease of compliance through digital mediums, FY timelines and terminologies are more important than ever to all the stakeholders of the financial ecosystem in India.
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You might get a fee if you file late, pay extra for tax owed, and you could miss out on some tax breaks. In some cases, you can't keep losses for next time.
Financial year (April 1 to March 31) decides the duration for which your investments are eligible for tax deduction under sections such as 80C.
Retain salary slips, Form 16, proofs of investments, TDS certificates, rent receipts, bank statements, and statements of capital gains.
This schedule is in line with the British colonial heritage and synchronises with the crop cycle and accounting cycle for better tax and budgetary planning.
Yes, nations have their own financial and assessment years. As an example, America uses a calendar year (Jan–Dec), as opposed to India.
Most companies in India adopt the same financial year (April–March) for the convenience of reporting tax, unless exempted with the authorities' approval.
The financial year (FY) is where the revenues are generated; the assessment year (AY) is the subsequent year when such revenues are taxed.
Tax refunds are made in the year of assessment when incomes and taxes incurred during the last financial year are checked and verified.
The period from April 1 to March 31 is a financial year in India. To illustrate, the income received during FY 2024 25 is evaluated during AY 2025- 26.
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