The era of having different financial years by the companies is over. This means 2 things – one, the financial year ending will be uniform and the financial year will be of 12 months except in few cases.The companies are supposed to align their financial years to end on 31st March within 2 years from 1.4.2014. This transition period allows companies to retain different financial year for 2014-15 and 2015-16. From 2016-17, the companies will have no option but to end their financial year on 31st March 2017.
The companies incorporated under Companies Act, 2013 do not get any transition period. If the date of incorporation is on or after 1st January of the year then the financial year will end on 31st March of the following year. A company incorporated before 1st January will have financial year ending on following 31st March.
Is there an option to follow different financial year than 31st March?
It is possible to have different financial year ending for companies which are the holding or subsidiary of company incorporated outside India subject to approval of National Company Law Tribunal. The period can also be different than a year i.e. 12 month period.
Companies have to gear up to new era of Corporate Management & Governance. More to follow.
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