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Fiscal year vs. Financial year : Differences
Though both financial year and fiscal year, in general way, used to mean one and same. Still the terms carry vital difference in meaning.
A Fiscal year is a period for which businesses/organisations/companies prepare their annual financial statements/reports. Generally these annual financial reports are prepared as per the Income Tax rules prevailing in the Country. In India, the fiscal year of a Company is generally from April 1st to March 31st of next year.
A Fiscal year can also be referred to as "Tax Year" of a Company.
Tax Returns of the organisations are filed with reference to the Fiscal years.
In USA, the Companies are required to follow a tax year for filing its tax returns, which can be fiscal year or calendar year.
Whereas as per Section 2(41) of the Companies Act, 1956, "financial year" means, in relation to any company or body corporate, means theperiod ending on the 31st day of March every year, and where it has been incorporatedon or after the 1st day of January of a year, the period ending on the 31st day of Marchof the following year, in respect whereof financial statement of the company or body corporate is made up.
After the incorporation of a company, for the initial year of operation, a Company can also have a its financial year starting from the incorporation date itself.