Can we change our company's financial year from 31 March?

You run a company. Your books close on 31 March, as everyone's do. Now a reason has come up to close them on 31 December or 30 June instead.
So you want to know: can we simply change the financial year?

The short answer is no, not by a board resolution or a change in your articles. The financial year of a company is fixed by the Companies Act, 2013 itself. There is one narrow route to a different year, and it needs the approval of the Central Government. This article explains what the law says, who can use that route, and how to keep your annual filings clean while you wait.

What the law says today

The definition sits in section 2(41) of the Companies Act, 2013. A "financial year", in relation to any company or body corporate, means the period ending on the 31st day of March every year. It is the period "in respect whereof financial statement of the company or body corporate is made up" (s.2(41), Companies Act 2013).

Two things follow.

First, the year-end is 31 March. It is not a choice the board makes.

Second, there is a rule for new companies. Where a company is incorporated on or after the 1st day of January of a year, its financial year is the period ending on 31 March of the following year (s.2(41), Companies Act 2013). So a company incorporated in January 2027 does not have to close a tiny stub year on 31 March 2027. Its first financial year ends on 31 March 2028. That is a feature of the definition. It is not a way to pick any other date.

The same definition also says that a company existing when the Act began had to align its financial year with this clause within two years of commencement (third proviso to s.2(41), Companies Act 2013). That window has long closed, so it gives no room today.

The one exception: foreign-group companies

The Act does allow a different year, but only in one situation. The first proviso to section 2(41) covers a company or body corporate that:

• is a holding company, a subsidiary or an associate company of a company incorporated outside India, and
• is required to follow a different financial year for consolidation of its accounts outside India.

For such a company, the Central Government may, on an application made "in such form and manner as may be prescribed", allow any period as its financial year, whether or not that period is a year (first proviso to s.2(41), Companies Act 2013).

Plain words: if your overseas parent must consolidate your numbers into its own accounts on, say, a calendar-year basis, you can ask the Government to let your Indian company follow that year. The permission can even cover a period that is shorter or longer than twelve months, which matters for the transition year.

Three points to notice.

• The ground is consolidation outside India. A wish to match a customer, a lender or a seasonal cycle is not a ground under this proviso.
• The decision is the Central Government's. It is not the company's, and it is not the auditor's.
• This proviso was substituted by the Companies (Amendment) Act, 2019. Before that, such cases were decided by the Tribunal. The second proviso now says that applications pending before the Tribunal on the date that 2019 Act commenced were to be disposed of by the Tribunal under the earlier provisions (second proviso to s.2(41), Companies Act 2013). Any new application goes to the Central Government, not to the Tribunal.

The Act leaves the form and manner of the application to the rules. Rule 40 of the Companies (Incorporation) Rules, 2014, as inserted in December 2018, provides for an application for change in financial year under section 2(41), to the Regional Director in e-Form RD-1, with the grounds and reasons, the board minutes and details of any application in the previous five years. We could not confirm from the texts we reviewed whether that rule or the filing fee has changed since. Check the current form and fee on the MCA portal before you file.

Reading the Act as it stands

You may hear that the rules on financial years are about to loosen. Do not plan around a change that has not been enacted and brought into force. A company can only rely on the law as it stands today, and the text of section 2(41) today is the one set out above: 31 March, with one exception for foreign-group companies. If you believe a change has taken effect, check the Act as amended on the MCA website and with your CA before you act.

The deadline clock

Even if the year-end never moves, your annual compliance runs off it. Getting the year wrong, or running two year-ends in your head, is how companies miss dates. These are the dates tied to the financial year.

Annual general meeting. Every company other than a One Person Company must hold an AGM each year. Not more than fifteen months may pass between one AGM and the next. The first AGM must be held within nine months from the closing of the first financial year. In any other case, the AGM must be held within six months from the date of closing of the financial year (s.96(1), Companies Act 2013). For a 31 March year-end, six months takes you to 30 September. For a company approved to follow a 31 December year, the same six months would end on 30 June.

Filing the accounts. A copy of the financial statements, with the documents attached to them, as adopted at the AGM, must be filed with the Registrar within thirty days of the date of the AGM (s.137(1), Companies Act 2013). If the statements are not adopted at the AGM, the unadopted statements are filed within thirty days of the AGM, and the adopted ones within thirty days of the adjourned AGM (first and second provisos to s.137(1), Companies Act 2013). If the AGM is held on 30 September, thirty days takes you to 30 October.

One Person Company. A One Person Company files its financial statements, adopted by its member, within one hundred eighty days from the closure of the financial year (third proviso to s.137(1), Companies Act 2013). For a 31 March year-end, one hundred eighty days from closure ends on 27 September.

Income tax. Under the Income-tax Act, 2025, "tax year" means the twelve months of the financial year commencing on 1 April (s.3(1), Income-tax Act, 2025). If a business is newly set up in a financial year, the tax year runs from the date of setting up to the end of that financial year (s.3(2), Income-tax Act, 2025). So the tax year follows the financial year that the Companies Act has fixed. A foreign-group company that gets approval for a different period should confirm with its CA how the tax year is to be read for the transition, because we did not review a rule dealing with that case.

Step by step: what to do if you think you need a different year

• Write down the reason. Is it consolidation for a foreign parent, subsidiary or associate? If yes, you may fit the first proviso to section 2(41). If the reason is only commercial convenience, you do not fit today's text.
• Get the parent's consolidation need in writing. The proviso turns on the company being "required" to follow a different year for consolidation outside India. A letter or policy extract from the foreign company that shows the requirement will support the application.
• Check the current form and fee on the MCA portal. The Act says "in such form and manner as may be prescribed". Use the form the portal shows now, not an older one.
• Apply to the Central Government, not the Tribunal. Since the 2019 Act, new applications are to the Central Government.
• Do not change anything until the order comes. Keep the books, the AGM calendar and the auditor's engagement on the 31 March year until you hold the approval.
• When approved, reset the calendar. The approval will name the period allowed. Move the AGM clock in section 96 and the thirty-day filing clock in section 137 to that period, and tell your auditor, bankers and the tax filer.

What not to do

• Do not close the books on a December or June date on your own. The Act defines the year as ending 31 March. Statements "made up" to another date are not made up to a financial year as the Act defines it.
• Do not rely on a board resolution or an articles amendment. The definition is in the Act. A company cannot vary it by its own paper.
• Do not time your incorporation to get a long first year unless you understand the rule. The January rule exists in section 2(41), but your first AGM clock then runs from the close of that longer first year (s.96(1), Companies Act 2013).
• Do not assume a proposal is law. Read the Act as it stands today.

What to do now

Have a CA review your facts before you act or file.

FAQs

Can a private limited company change its financial year to December?
Not by itself. Section 2(41) of the Companies Act, 2013 fixes the year as ending on 31 March. The only exception in the Act as we reviewed it is for a holding, subsidiary or associate company of a foreign company that must follow a different year to consolidate outside India. That needs approval from the Central Government (first proviso to s.2(41), Companies Act 2013).

We are a subsidiary of a US company that reports on a calendar year. Can we follow it?
You may fit the first proviso to section 2(41). The Central Government may allow any period as your financial year on your application in the prescribed form and manner. Prepare the parent's consolidation requirement in writing and check the current form on the MCA portal.

Our company was incorporated on 15 January. When does the first year end?
A company incorporated on or after 1 January of a year has a financial year ending on 31 March of the following year (s.2(41), Companies Act 2013). It does not have to close on the 31 March that is two months away.

Does the income tax year change if the financial year changes?
Under the Income-tax Act, 2025, the tax year is the twelve months of the financial year commencing on 1 April (s.3(1), Income-tax Act, 2025). If you obtain approval for a different period, ask your CA how the tax year applies to the transition. We did not review a provision on that point.

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See Also

• Financial Statements Under the Companies Act: Preparation, Signing, Circulation and Filing
• ROC adjudication notice under section 454: reply, pay or appeal
• We missed the AGM date - can we still hold it, and what does it cost?