Madhya Pradesh becomes 1st state to shift to January to December financial year
Changing the financial year to January-December would mean shifting the tax assessment year, changes in infrastructure, especially at the company level.
Madhya Pradesh on 2 May 2017 became the first state in India to switch to the January-December financial year from existing April-March cycle. The plan to switch the financial year was endorsed by the state cabinet.
A decision to this effect was taken at the state cabinet meeting held in Bhopal.
The move and endorsement of the plan will break a 150-year old tradition of adopting the financial year from April to March. The practice of April-March financial year was adopted in 1867 by the British Government.
State public relations minister Narottam Mishra said, “The state cabinet in its meeting chaired by Chief Minister Shivraj Singh Chouhan today decided to shift the financial year to January-December. So, now the Budget session of the next financial year will be held either in December 2017 or January 2018”.
Mishra also said, for a smooth transition of the new financial year the state government will try to conclude the current financial year by December 2017. The Chief Minister has directed all ministries and departments to prepare a quarterly, half-yearly and annual road map of works so that all works are done within a fixed deadline.
Mishra also informed that to bring into effect the new financial year, the next budget session will be held in December-January.
What will be needed to shift the existing financial year cycle to the new cycle?
Reports suggest that any change or shift of the financial year will require amendments to different statues and tax law during the transition period, like tax assessment year, changes in infrastructure and more.
The move is based on Prime Minister Narendra Modi’s idea of shifting the financial year to January-December from the existing April-March period. The idea was put forward by the Prime Minister during the NITI Aayog’s governing council meet in Delhi on 23 April 2017.
Earlier, the union government had also constituted a high-level committee to examine desirability and feasibility of having a new financial year. The committee was constituted under the chairmanship of former Chief Economic Advisor Shanker Acharya. The report hasn’t been made public yet.