Financial Year provisions | section 2(41) | Companies Act, 2013

CS Jyoti Pandey 03 Oct 2021 14,145 Views 0 comment Print Company Law | Articles

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	1^st Jan to 31^st Mar	DOI to 31st Mar of the following year
‘First’ Financial Year	1^st April to 31^st Dec	DOI to 31st Mar
‘Subsequent’ Financial Years	NA	1^st April to 31st Mar

Conclusion:

‘First’ Financial Year	DOI to 31st March of the following year
‘Subsequent’ Financial Years	1^st April to 31st March

For Example:

*Date of Incorporation (DOI)*	*First/Subsequent FY*	*Financial Year*
1^st Jan to 31^st Mar e.g. 2^nd Feb, 2021	*‘First’* FY	*2^nd Feb, 2021* to 31^st Mar, 2022
1^st Jan to 31^st Mar e.g. 2^nd Feb, 2021	*‘Subsequent’* FYs	*1^st April, 2022* to 31^st Mar, 2023 and so on
1^st April to 31^st Dec e.g. 11^th May, 2021	*‘First’* FY	*11^th May, 2021* to *31^st Mar, 2022*
1^st April to 31^st Dec e.g. 11^th May, 2021	*‘Subsequent’* FYs	*1^st April, 2022* to 31^st 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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