31ST MARCH - WHY THE 'YEAR' ENDS TODAY?
By Ruma Dubey
31st March. The date would be shivers down the spine of bankers and auditors. It’s the day of frenzied activity, of closing the fiscal and paying up taxes, settling all books. The new year, for most of India Inc, Banks and taxman, begins on 1st April and ends on 31st March. For those following the fiscal, 31st Dec is a quarter ending with one more quarter to go for the year to actually end.
But when we think about it – it makes one wonder why this date? Why not 31st Dec like the rest of the world? Why this very confusing, not even mid-year kind of year end and beginning?
This fiscal year ending actually is a legacy left behind by the British. They followed the accounting period of April to March after they decided to adopt the Gregorian calendar system of accounting. It was the East India Company which first brought in this fiscal and once the British established their rule in India, naturally, all companies started following the same. Other “British colonies” which follow the same accounting year ending are South Africa, Hong Kong, Jamaica, Burma, Singapore and Canada also follow the same. There are some 33 countries around the world, which follow the same April to March fiscal.
Ironically, the UK itself has a weird date – their fiscal begins on 6th April and ends on 5th April. USA too does not have a Jan-Dec fiscal; its accounting year begins on 1st Oct and ends on 30th Sept and that of Australia begins on 1st June and ends on 31st July.
In developed countries, companies are free to choose their own fiscal year ending and it is seen that 65% of the companies in USA and almost equal in UK align their fiscal with calendar year ending – 31st Dec. But the rule differs in India. It is mandatory for companies for companies to follow April – March year ending; only those with Indian Depository Receipts or IDRs are free to choose their accounting year ending.
It is surprising that political parties, which are quick to debunk anything which was set in by the British, decided to continue with this fiscal ending; by now many should have protested, at least that has been their behavioral pattern.
Maybe the reason for this is not just the British. This has got to do with the farm sector. If one carefully looks at all our festivals, which were celebrated much before the arrival of fiscal and British, they are all based on harvest season. It is only when the farmer has money that there are celebrations. There are no festivals during the sowing and toiling period as they seldom have time to celebrate and little money. That could also probably be one of the reasons why, the same fiscal is followed as the quarters track the agrarian cycle very well.
There is another explanation – 1st April is the day when Hindi festival of Vaishakh, a Hindu new year is celebrated. You typically have the Punjabi new year, Baisakh and Tamil New Year, Vishu ; Assamese Rongali Bihu; Mahabishuba Sankranti of Odisha; Poila Baishakh in Bengal. Majority though celebrate a new year in Chaitra, which comes in March. The bottomine though is that be it March or April, most Hindu calendars follow around the same year ending; which is why the fiscal year ending fits in so well.
At the end of it, call it what we like or give any reasoning, lets accept that like the English language, this is a legacy of the British and we have made it a part of our life. It is too deep rooted now to be uprooted. So lets look at 31st March as a legacy of our past and pay up our taxes and be prepared with a clean set of book from tomorrow.