Investments are made by almost all individual to increase their monetary fortune over the time. With change being the only constant thing and planning to change the financial year to January to December by government of India, ever wonder what will happen to the investments.
Let take a look at the insight and effect of the proposed change in the financial year.
The new financial tenure of January to December means that all incurred expenditure and income of a calendar year must be expressed in the calendar years Tax file return. Further with the introduction of the new proposed financial year, it would necessary for all citizen of India to follow the new accounting year which actually allows India to be at par with all other nations’ financial year, which is globally a common practice.
However the beginning of this new regime would mean either the first financial year would be shorter or longer in nature. However multiple related questions comes up with this issue, whether this will have effect on the tax slab for the first year or not, whether there would be change in date of submission of insurance premium or not if yes whether it will affect the value of the insurance many such questions arises because of this changes. This entire scenario at least for the beginning will have a huge impact on the tax slab as well.
Multinational companies will not have to maintain two different calendar cycles because of this changes.
International mobile tax payers will also be at ease since the cycle became same with that of the other international country in comparison to its residential state, as a result the mobile tax payer can easily file their return on time without delay, and would be hassle free in calculating the taxable income and related taxes.
The biggest impacts this change in the financial year will make are
Current financial year leads to sub-optimal utilization of working season – typically believed to spread from October till June (around 9 months) with the period between July-September being the monsoon season
Difference in agriculture crop period, statistics and data collection periods from the point of view of national accounts;
Convenience of legislators;
International practices;
National culture/traditions
Other than this the biggest impact that the change in the financial year will create is the budget. Budget creation is probably the most difficult task. However in creation of the budget in the month of April we miss out the effect of the monsoon, or drought can have on the people of the nation. With the financial year being targeted to be from January to December creation of a perfect budget will be easier, as it will include the impact of the nature throughout the year across different state. Thus a beneficiary national budget formation will be comparatively easier.
Outlook
Introduction of any change or beginning of any new thing have its own ups and down. However the change in the financial year actually has signs of more positive impact than that of the current financial year. However practically judging the impact is not as easy by watching from outside, as practical impacts are always uncertain. But one thing for sure, change in the financial year will definitely bring India at par with the first world countries of the globe.
