Under the Companies Act, 2013 , the standard financial year for companies in India runs from 1 April to 31 March, as defined under Section 2(41). However, companies such as subsidiaries, holding companies, or entities requiring alignment with global reporting frameworks may apply to change their financial year. Such a change requires prior approval from the Central Government, whose powers are delegated to the Regional Director (RD) under Rule 40 of the Companies (Incorporation) Rules, 2014. The process begins with a Board Resolution approving the proposed change, followed by filing e-Form RD-1 with supporting documents explaining the reasons for the change. If defects are found, resubmission is permitted within 15 days, up to two times. The Regional Director must approve or reject the application within 30 days, failing which the application is deemed approved. After approval, the company must file the RD order with the Registrar of Companies in Form INC-28 within 30 days. The change becomes effective only after this filing.
LEGAL FRAMEWORK
Applicable Section
- Companies Act, 2013 – Section 2(41): Defines “financial year” Applicable Rule
- Rule 40 of the Companies (Incorporation) Rules, 2014
Delegation of Powers
The powers of the Central Government under Section 2(41) have been delegated to the Regional Directors (RDs). The application must be filed before the jurisdictional Regional Director.
Forms Involved
The following e-forms are required during the process:
1. e-Form RD-1 – Application for change in financial year
2. e-Form RD GNL-5 – For resubmission in case of defects or incomplete applications
3. Form INC-28 – Filing of RD Order with the Registrar of Companies (ROC)
STEP-BY-STEP PROCEDURE
STEP 1: Convene Board Meeting & Pass Resolution
The process begins with internal corporate approval.
- Convene a duly constituted Board Meeting.
- Pass a Board Resolution approving the proposed change in financial year.
- Clearly record:
- Grounds and justification for change
- Votes cast in favour and against
STEP 2: Filing of Application with Regional Director
File e-Form RD-1 along with prescribed fees.
Mandatory Attachments:
- Detailed grounds and reasons for change
- Certified copy of Board Resolution and minutes
- Power of Attorney / Memorandum of Appearance (if applicable)
- Details of any similar application filed within the last five years and its outcome
STEP 3: Resubmission in Case of Defects
If the Regional Director identifies deficiencies:
- The applicant must resubmit through e-Form RD
- Resubmission must be made within 15 days
- Maximum two resubmissions are permitted
Failure to rectify defects within the permitted timeline may result in rejection.
STEP 4: Approval or Rejection by Regional Director
The Regional Director shall:
- Approve or reject the application within 30 days from:
-
- Initial filing, or
- Last resubmission (whichever is later)
If deficiencies remain unrectified, the application may be rejected with recorded reasons.
Deemed Approval
If no order is passed within 30 days, the application is deemed to have been approved.
This provision ensures procedural certainty and prevents administrative delays from affecting corporate operations.
STEP 5: Post-Approval Compliance with Registrar
Upon receipt of approval:
- File the RD Order in Form INC-28 with ROC.
- Filing must be done within 30 days of receipt.
- Pay applicable fees as per the Companies (Registration Offices and Fees) Rules, 2014
Only upon filing of INC-28 does the change become fully effective in ROC records.
Key Compliance Considerations
Boards and management should carefully evaluate:
- Alignment with group companies or foreign parent entities
- Impact on taxation and advance tax planning
- Statutory audit timelines
- Consolidation and reporting efficiencies
- Compliance with FEMA or other regulatory frameworks (if applicable)
Importantly, change in financial year should not be used as a tool to avoid statutory liabilities or regulatory compliance.
CONCLUSION
Changing a Company’s financial year is a strategic corporate decision that may offer benefits such as:
- Global reporting alignment
- Improved financial consolidation
- Tax planning efficiencies
- Streamlined governance and audit processes
However, the process demands strict adherence to statutory requirements under the Companies Act, 2013 and related rules.
FREQUENTLY ASKED QUESTIONS (FAQS)
Q1: Can the financial year be changed back once it has been amended?
Yes, a company can change its financial year back to the original period or to a new period. However, it requires the approval of the Regional Director through the same process as outlined above. There are no specific restrictions on changing the financial year multiple times, but each change must be supported by valid reasons and comply with statutory regulations.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
Author Bio
Our Liaison Office in South Delhi adopted the calendar year (Jan–Dec) as its financial year, with the first period extended to 15 months (Sep 2024–Dec 2025). Audited accounts and FC‑4 have been filed and accepted on MCA portal.
Repeated attempts to file RD‑1 under Section 2(41) failed, and ROC/ RD Delhi verbally confirmed that RD‑1 is not applicable to foreign companies, with FC‑4 acceptance treated as deemed approval.
Is this stance consistent with Section 2(41), and can FC‑4 acceptance alone be relied upon as sufficient evidence of MCA’s recognition of calendar year reporting for a Liaison Office?