Govt invites public comments on changing financial year
The committee formed to recommend a new fiscal period for India must also explain the effect of the new cycle on different agricultural crop seasons
New Delhi: Keen on a wider debate on changing the financial year, the government has sought public comments on the desirability of replacing the existing period in a bid to improve budgetary process and cash management.
The government as well as most companies in India follow 1 April to 31 March as the financial year.
A post on the MyGov website said: “There are many arguments for and against the change in financial year which revolve around issues of budget and cash management by government, seasonality of government revenues and expenditure, impact of monsoon on budget forecasting, working season, timelines involved in the legislative cycle of passage of budget by the Parliament."
It also flagged issues concerning international comparability of fiscal statistics, aligning the government’s financial year with the year for tax assessment and corporate accounting purposes.
Some arguments are less on the intrinsic merit or demerit of the change and more on the timing of the change, such as when it coincides with other developments impacting businesses, the post inviting public comments by 30 September said.
To examine the feasibility of having a new financial year, the government has already set up a committee headed by former chief economic adviser Shankar Acharya.
The committee, which will submit its report by December, will have to provide reasoning for the suitability of the financial year from the point of view of correct estimation of receipts and expenditure of the Union and state governments.
Besides Acharya, the members of the committee include cabinet secretary K.M. Chandrasekhar, former finance secretary P.V. Rajaraman and the Centre for Policy Research senior fellow Rajiv Kumar.
It also has to state its effect on the different agricultural crop seasons and the relationship of financial year to the working season. Besides, the committee will also have to analyse its impact on businesses, taxation systems and procedures, statistics and data collection and the convenience of the legislatures for transacting budget work.
The issue of change of financial year was last examined by the L.K. Jha committee in 1985, whose recommendation to move to a financial year of 1 January to 31 December was not accepted by the then government.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!