'Financial Year', in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up.
### The Two Limbs Explained
Date of Incorporation
First Financial Year ends on
Between 1st April – 31st December of a year
31st March of the same following year
Between 1st January – 31st March of a year
31st March of the next following year
### Exception — Different Financial Year (Central Govt Approval)
Where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, may apply to the Central Government for permission to follow such different financial year.
### Worked Examples Table
Date of Incorporation
First FY Ends
1st June 2024
31st March 2025
15th February 2025
31st March 2026
5th December 2024
31st March 2025
1st January 2025
31st March 2026
Worked example
### Example 1
Q. XYZ Pvt. Ltd. was incorporated on 15th February 2025. When does its first financial year end?
A. Since the company was incorporated on or after 1st January, its first financial year shall end on 31st March 2026 (the following year).
### Example 2
Q. A subsidiary of a US-based parent company follows the calendar year (Jan–Dec) for consolidation. Can it adopt the same in India?
A. Yes. It may apply to the Central Government and on permission being granted, may follow a different financial year for the purposes of consolidation of its accounts.
⚠️ Common exam mistakes
Forgetting the 1st January cut-off rule for the first financial year of a newly incorporated company.
Believing every company can choose a different financial year — only those linked to foreign holding/subsidiary/associate can apply.
Confusing the authority — the application is to the Central Government (via Regional Director), not NCLT.
Treating financial year as flexible — it is uniformly 1st April to 31st March under the Act.
Bare-Act text Section 2(41) · Companies Act, 2013 · click to expand
'Financial year', in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up: Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, if it is satisfied, allow any period as its financial year, whether or not that period is a year.