The Budget for 2018 may be presented as early as in November this year if the government goes ahead with its plan to change the fiscal year to January-December, coinciding with the calendar year.
According to sources, the Narendra Modi-led government has made up its mind to end the 150-year-old practice of following the April-March cycle starting next year.
While the call for moving to a January-December financial year is not new, the idea gained traction after Modi pitched for a change in a Niti Aayog governing council meeting in April this year.
Moving the financial year could make India join the global league of developed countries that follow this cycle. According to experts, the move is likely to be welcomed by multi-national firms that are currently compelled to follow two types of financial years – April to March in India and January to December in their parent country.
A uniform structure will be a big relief for these firms. It will also make the Indian economy align with that of the global economy, which follows the Jan-Dec cycle.
However, migrating to the new format comes with a lot of challenges. Bringing forward the schedule of Budget presentation tops the list. Besides, tax assessment year will need to be changed, and the timing of Parliament sessions may also have to be tweaked. In the case of Indian companies, they will have to do a lot of housekeeping and readjustments.
D K Joshi, chief economist at rating agency Crisil, the Indian subsidiary of Standard and Poor’s, said, “It will align our numbers with rest of the world.”
A report by the Shankar Acharya committee, set up by the government to look into the feasibility of changing the accounting year, noted that the change would align the financial year with the crucial monsoon cycle and also with the country’s crop harvests both for Rabi and Kharif seasons. At present, before the Union Budget presentation in February, the government doesn’t get any solid data on monsoon forecast for the new financial year, it noted.
GST: Government defers TDS, TCS for smooth rollout
With just four days left for the goods and services tax (GST) rollout, the government has deferred implementation of Tax Deducted at Source (TDS) and Tax Collection at Source (TCS) provisions as well as exempted from registration small businesses selling on e-commerce platform. E-commerce companies will not be required to collect 1% TCS while making payment to suppliers under GST which will be rolled out from 1 July. As per the Central GST (CGST) Act, the notified entities are required to collect TDS at 1% on payments to suppliers to goods or services in excess of Rs 2.5 lakh.