# Definition of 'Financial Year' — Section 3(21)
## Statutory Definition
> Section 3(21): 'Financial year' shall mean the year commencing on the first day of April.
## The Financial Year Cycle
Financial Year = 1st April to 31st March (next year)
Example: Financial Year 2026-27 means 1st April 2026 to 31st March 2027.
## Financial Year vs Calendar Year
| Aspect | Financial Year | Calendar Year |
|---|---|---|
| Start | 1st April | 1st January |
| End | 31st March | 31st December |
| Used for | Accounting, taxation, government budgets | General reference, ordinary timekeeping |
| Length | 12 months | 12 months |
| Example | FY 2026-27 | Year 2026 |
## Why does the Financial Year matter?
1. Budgeting: Government budgets follow the Financial Year
2. Accounting: Companies prepare annual accounts for the Financial Year
3. Taxation: Income Tax, GST returns are based on Financial Year
4. Compliance: Many statutory deadlines are tied to the Financial Year
5. Reporting: Annual reports, audits — all based on Financial Year
## Exception in Companies Act
Note: While the General Clauses Act defines Financial Year uniformly as April-March, the Companies Act, 2013 has its own definition of 'Financial Year' in Section 2(41) which may differ for some companies (e.g., holding/subsidiary of foreign company).
> Rule: Where an Act has its own definition, that prevails over the General Clauses Act definition.
## Quick Memory Aid
> 'F'inancial year — 'F'irst April'
> 'C'alendar year — 'C'hristmas to Christmas (Jan to Dec)'