April vs January: The Logic Behind India’s Fiscal Calendar

“Dilshad, can I ask you something a bit random?”

It was Akshay, one of my long-time client. We were on a Zoom call, wrapping up his year-end review, when he suddenly asked:

“Why does our financial year run from April to March? Why not from January to December like the normal calendar?”

That question instantly took me back years.

This was even my doubt when I started my commerce journey in 11th standard. While the rest of the world seemed to follow the January to December calendar, commerce textbooks were talking about April to March. It puzzled me back then and it still does for many today.

So I told Akshay what I had once tried to understand myself.

The financial year system we follow today actually began during British rule in India. The British administration chose April to March to align with India’s agricultural cycle. By March, the harvest season would usually end, and April was seen as a fresh start for trade, tax collection, and planning. It made administrative sense at the time and we’ve stuck with it ever since.

Over the decades, all our laws, compliance structures, and tax systems were designed around this cycle. Income tax returns, GST, TDS, audits, everything was framed with the April to March window in mind.

Also, every year, the Union Budget is presented on 1st February. This gives the government, businesses, and individuals enough time to absorb the changes, make necessary adjustments, and implement them from 1st April. If the financial year started in January, the Budget would land midway through the year, leading to confusion and rushed implementation.

From a compliance perspective, it also helps maintain consistency. From audit timelines to turnover thresholds, tax slabs to TDS returns, everything is built around the April to March model. If we decided to change it, it wouldn’t just be a date adjustment. We’d have to rewrite tax laws, alter company law timelines, update ERP systems, change templates, and even retrain lakhs of professionals across the country. It would be a nationwide disruption.

And this isn’t just an India-specific situation. Many other countries follow financial years that are different from the calendar year, depending on their own economic and administrative logic.

Here’s a quick comparison:

Country	Financial Year	Same as Calendar Year?
India	April 1 – March 31	❌ No
UK	April 6 – April 5	❌ No
USA	October 1 – September 30 (Govt)	❌ No
Germany	January 1 – December 31	✅ Yes
Australia	July 1 – June 30	❌ No

As you can see, India is not alone in this.

So, while January might feel like the logical beginning to a year, April 1st is the true beginning of the financial journey for anyone involved in business, accounting, or tax.

April 1st may be called April Fool’s Day, but for us finance folks, it’s the most serious and structured day of the year.

This post also marks 1 out of 365 in my daily blog series, where I’ll be sharing stories, insights, and practical takes on everything related to Income Tax, GST, Accounts, Audit, Law, Costing, Financial Management, and more.

If you found this useful, stay tuned because there’s a lot more coming, every single day.

Let’s make finance easy, one blog at a time.