It could mean a lot of headache – at least for paperwork.
The government has set up a committee to look into the feasibility of changing the financial year from the current April to March cycle.
While the timing and the cycle of the new financial year is undetermined, the committee will report its findings on the possible benefits from such a move by end of December. It will also have to report on the rationale behind its recommendations and what it means for reporting and estimation of receipts and centre and state expenditures.
The committee, which will be headed by former Chief Economic Advisor Shankar Acharya, will also have to assess the possible impact on businesses, taxation systems and procedures, statistics and data collection, among others.
In case, there is a change in the financial year, the panel will also look into the modalities including a possible transition period, the timing of the change, change in tax laws during that period, and amendments in statutes, among other measures.
The committee will also include former Cabinet Secretary KM Chandrasekhar, former Tamil Nadu Finance Secretary PV Rajaraman and Rajiv Kumar, a fellow at the Centre for Policy Research.
India has explored the possibility of changing financial years before. In 1984, it considered moving to the calendar year – January to December. One rationale in favour of a different financial year is the arrival of the monsoon soon after the new financial year starts, a potential hurdle to policy-making, said the Hindustan Times.
Financial years vary across the world. The US follows October 1 – September 30, while China’s is the same as the calendar year – January 1 to December 31. Countries that follow the April 1 to March 31 include the UK, New Zealand, Japan and Hong Kong, among others.