Tax, GST and company law glossary

Financial Year (FY)

The 12-month accounting period from 1 April to 31 March used for tax, GST and company accounts in India.

In short

Businesses prepare their books and file GST and ROC returns by financial year. For income tax, the term is replaced by tax year from 1 April 2026.

What it means

A financial year (FY) is the 12-month period from 1 April to 31 March that India uses for accounts and compliance. FY 2026-27, for example, runs from 1 April 2026 to 31 March 2027. Businesses close their books, prepare balance sheets, file GST annual returns and file ROC returns on this basis.

How it works

Under the old Income-tax Act, 1961, income earned in a financial year (the “previous year”) was assessed in the following “assessment year”. This often confused people: income of FY 2024-25 was filed as AY 2025-26. The Income-tax Act, 2025, which applies from 1 April 2026, replaces both terms with a single “tax year”, which is the same 1 April to 31 March period in which the income is earned.

  • Income tax: income earned from 1 April 2026 to 31 March 2027 is for tax year 2026-27.

  • Earlier years: income up to 31 March 2026 (FY 2025-26) is still filed under the old Act as AY 2026-27.

  • Advance tax instalments fall within the year: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March.

  • GST and company law continue to use the term financial year.

Example

Meena, a freelance designer, earns ₹9,00,000 between April 2026 and March 2027, and her estimated tax after deductions is ₹40,000.

Period of income: 1 April 2026 to 31 March 2027

Name of the year: tax year 2026-27 (financial year 2026-27 in her books)

Advance tax: 15% by 15 June 2026 = ₹6,000; cumulative 45% by 15 September 2026 = ₹18,000; cumulative 75% by 15 December 2026 = ₹30,000; full ₹40,000 by 15 March 2027.

Her return for this income is filed in 2027. In contrast, her income of April 2025 to March 2026 was reported as AY 2026-27 under the old Act and filed in 2026.

Key points to remember

  • When paying tax through challan, pick the correct year; paying for the wrong year is a common mistake and needs a correction request.

  • For income up to 31 March 2026, you will still see “assessment year” on notices and returns.

  • A newly started business can have a first financial year shorter than 12 months, ending on 31 March.

  • Keep invoices, bank statements and proofs organised by financial year; the same period drives income tax, GST and ROC filings.

Income Tax

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