The Income-tax (IT) department is expected to propose making financial year co-terminus with the calendar year to help simplify tax-filing across the country, reports Business Standard (BS).
As part of its proposals to the Department of Revenue on the interim budget to be presented in July, the IT Dept is likely to support a resolution advancing the financial year by three months.
Presently the fiscal year runs from 1 April to 31 March and the calendar year runs from 1 January to 31 December.
“If the Bharatiya Janata Party (BJP) is reelected on 23 May, it may change financial year (April-March) to calendar year (January-December). However, it may face operational challenges and should be given sufficient time before changing the system,” said a source to BS.
“If it gets introduced, this would end the 150-year British practice. Similarly, tax department is also pitching for making financial and assessment year same under the I-T Act,” he added.
Approval From The Highest Levels
In 2017 Prime Minister Narendra Modi had vouched for the idea of bringing the financial year in line with the calendar one. This proposal also found NITI Aayog’s endorsement.
The NDA government had even set up a committee to examine the viability of the proposal.