The change in the fiscal year from January to December, as suggested by Prime Minister Narendra Modi, will be beneficial for the common man, feel experts.
The change in the fiscal year from January to December, as suggested by Prime Minister Narendra Modi, will be beneficial for the common man, feel experts. Prime Minister Narendra Modi on Sunday, while addressing the Niti Aayog meet, had pitched the idea of migrating to fiscal year January to December period from April-March period. The suggestion by PM has come after keeping in view the farmers of the country.
Since India has been primarily an agriculture-based economy, the revenue cycle in the agriculture sector is typically April to March. The April-March cycle, as per experts, was mainly to match the agriculture revenue cycle and ease out financial transactions. Experts see the move to shift financial year to January –December in sync with the calendar year and aligning with other developed countries, who also work in the same format.
What does this move mean for the common man? In simple terms, this would mean the financial year for an individual will start from January 1st and end on Dec 31st. The change to January-December financial year would mean an individual has to pay taxes by the end of the same year. Moreover, there will be a change in the ITR filing, which may change to March 31st instead of July 31st, which is presently the last day for filing.
On the other hand, shifting to January to December period will remove the confusion surrounding the financial year and quarters. It will be easier for anyone to remember the financial transaction timings.
You may also watch
Elaborating why the move will be beneficial for the common man, Manoj Sharma- Co- Founder and Principal Officer, Policybazaar.com, said, “There will not be much difference to a common man, rather it will be beneficial for them. Further, only the taxation period will get a change from the current April to March cycle to a new 12-month period (i.e. January- December). At present, the common man is usually confused about the financial year and transactions around it. It will be easy for them to sync their expenses. However, this can be more beneficial if the education system is also streamlined and is in sync with this change. Currently, the format for schools and colleges is April to March.”
However, some experts feel that whether the move will be beneficial for a common man or not depends on various factors and it can only be guaged after the exact details. Chetan Chandak, Head of Tax research, H&R Block India said,” The change to January-December financial year means that all the income and expenses will be accounted over calendar year and the taxpayers will be required to file the tax returns for calendar year. But whenever the government first decides to switch to new regime it would mean that the first financial year under the new regime will be either shorter or longer than 12 months.”