The new companies act has mandated for all the companies to follow an uniform financial year for preparation of annual financial statements viz. balance sheet, profit and loss account.
Provisions under companies act 2013
Section 2(41) defines “financial year”, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up:
On an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year:
Time period within which companies must align its financial year
Provided further that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause;
The provisions of section 2(41) was made effective from 1st April 2014 by MCA notification dated 26/3/2014.
Old Provisions in Companies act 1956
Section 2(17): "financial year" means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not:
Provided that, in relation to an insurance company, "financial year" shall mean the calendar year referred to in subsection (1) of section 11 of the Insurance Act, 1938 (4 of 1938) ;
Provisions under Income Tax Act 1961
In income tax act, financial year is generally known as assessment year or previous year.
Section 2(9) of the said act defines "assessment year" means the period of twelve months commencing on the 1st day of April every year; and as per Section 3 of the said act “previous year" means the financial year immediately preceding the assessment year.