FINANCIAL YEAR
[Section 2(41) of the Companies Act, 2013]
Applicability:
Every Company or Body Corporate
Meaning:
The period in respect of which Financial Statements of the company or body corporate are prepared, beginning and ending up as follows –
SECTION 2(41) |
DATE OF INCORPORATION
(DOI) |
FINANCIAL YEAR PERIOD |
‘First’ Financial Year |
1st Jan to 31st Mar |
DOI to 31st Mar of the following year |
1st April to 31st Dec |
DOI to 31st Mar |
|
‘Subsequent’ Financial Years |
NA |
1st April to 31st Mar |
Conclusion:
‘First’ Financial Year |
DOI to 31st March of the following year |
‘Subsequent’ Financial Years |
1st April to 31st March |
For Example:
Date of Incorporation (DOI) |
First/Subsequent FY |
Financial Year |
1st Jan to 31st Mar e.g. 2nd Feb, 2021 |
‘First’ FY | 2nd Feb, 2021 to 31st Mar, 2022 |
‘Subsequent’ FYs |
1st April, 2022 to 31st Mar, 2023 and so on |
|
1st April to 31st Dec e.g. 11th May, 2021 |
‘First’ FY | 11th May, 2021 to 31st Mar, 2022 |
‘Subsequent’ FYs |
1st April, 2022 to 31st Mar, 2023 and so on |
Exceptional Case:
CONDITION |
COMPLIANCE | FINANCIAL YEAR |
Company or Body Corporate is a Holding or a Subsidiary or an Associate Company OF a Company Incorporated Outside India
AND is required to follow a different financial year for consolidation of its accounts outside India |
Application to CG (Regional Director) in Form RD-1 |
Any period may be allowed as its financial year, whether or not that period is a year |
For Example:
Company Incorporated In India |
Company Incorporated Outside India e.g. Canada |
S Ltd. |
H Ltd. |
‘Subsidiary’ of H Ltd. |
‘Holding Company’ of S Ltd. |
Required to follow FY of H Ltd. as per the laws of Canada for consolidation of its accounts |
FY is ‘March to Feb’ |
Here, S Ltd. can follow FY ‘Mar to Feb’ different from that prescribed under Indian Law i.e. ‘April to Mar’ if allowed by CG (RD) on an application made to it in e-Form RD-1. |
Transition Period:
2 years transitional period from the commencement of Companies Act, 2013 in respect of a Company or Body Corporate existing on such commencement.
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(In case of any inconsistency or clarification/ suggestions, author can be contacted for further details at pcsjyotipandey@gmail.com, M.No. +91 8076064476)
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