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No change in Financial year has been announced

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A message is being shared widely on social media with a claim that Reserve Bank of India (RBI) has extended financial year closing till 30 June 2020 and that the next financial year will be from 01 July 2020 to 31 March 2021. Let’s try to analyze the claim made in the post.

The archived version of the post can be found here.

Claim: RBI extended the year closing till 30 June 2020.

Fact: The normal financial year in India followed by the government & all other institutions including for taxation purpose is 01 April to 31 March. However, RBI’s accounting/financial year is from 1 July to 30 June. There is no change in the normal financial year. Hence the claim made in the post is FALSE.  

Financial Year in India

The financial year followed by the Government of India, all other organizations, companies and for the purpose of taxation, book keeping is 01 April to 31 March. The financial year for all tax compliance is also April to March.

This was adopted during the British regime. Multiple committees were set up in the past to revisit the fiscal year calendar. However, nothing has changed. In 2016, the government appointed a committee under the chairmanship of Dr. Shankar Acharya to examine the desirability and feasibility of having ‘a new financial year’. It was reported that the committee recommended changing to a January to December financial year. However, the government has not taken any decision on this till date.

What about RBI?

The Reserve Bank of India (RBI), on the other hand follows a July to June financial year. On the RBI website, it can be seen that the financial year of RBI is July to June. The same can be also seen in its Annual report. However, it has to be noted that this financial year has no bearing on other institutions like banks, companies or even the government which follow the April to March financial year.

What about the viral post on social media?

In the post, a link to a newspaper article is given. In the article, it can be read that ‘fiscal 2019-20 will end on 30 June 2020 while fiscal year 2020-21 will begin on 1 July 2020 but ends on 31 March 2021’ in the case of RBI. The article does not claim that RBI extended its current financial year till 30 June 2020 because it is already till 30 June 2020. So, there is no extension as claimed in the post

On the RBI website, it can be found that in a meeting of the Central Board of Directors of Reserve Bank of India, on 15 February 2020, ‘the Board recommended aligning the financial year of RBI, currently July-June, with the Government’s fiscal year (April-March) from the year 2020-21 and approved forwarding a proposal to the Government for its consideration’. So, there is no change in the current financial year. 

To sum it up, RBI’s financial year is already from 1 July to 30 June. Changes were proposed from the next financial year. Moreover, there is no extension to the financial year followed by government, companies and other organizations for book keeping.

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