Financial Year | Meaning and Definition

What is the financial year?

It is a one-year period in the Indian accounting system that begins on April 1st and concludes on March 31st. The fiscal year is the time frame during which money is earned. The fiscal year is another name for it. The money earned is assessed, taxed, and analyzed in the Assessment Year, which is the next financial year. The Assessment Year begins on April 1st and finishes on March 31st. The Assessment Year for the Financial Year 2020-21, for example, will be 2021-22. The Financial Year is abbreviated as F/Y, while the Assessment Year is abbreviated as A/Y.

Meaning of fiscal year

A fiscal year is utilized in public finance, which differs by country, as well as budgeting. Businesses and other organizations utilize it for financial reporting as well. Many jurisdictions require yearly financial reports to be made and published, but the reporting period does not have to coincide with the calendar year (1 January to 31 December). Accounting records must normally be kept and taxes computed on an annualized schedule, which is necessarily determined to the fiscal year in use for administrative reasons. The yearly computation of tax is extremely crucial for direct taxes like income tax.

Approximately 65 percent of publicly traded companies in the United States and considerably considerable firms in the United Kingdom utilize the calendar year as their fiscal year. With limited exceptions, particularly in Australia, New Zealand, and Japan, this is true in many nations around the world.