An Urban Company user received a refund from the professional services app a few days before March 31, much before the usual seven-10 days policy for such transactions, as the company was in a rush to settle all its accounts. Because tax filings have been wrapped up, financial deadlines met and new ledgers opened as the new fiscal starts from April 1.

But why does India’s financial year run from April 1st to March 31st? Why not align it with the calendar year like many other countries?

In the early 1800s, the British colonial government introduced a taxation system that followed the British financial year-April 1st to March 31st.

According to HDFC Bank, British officers stationed in India were expected to file taxes in sync with the British system. Aligning India’s fiscal calendar with Britain’s made revenue collection smoother and more predictable for the Empire.

By 1867, this system was formalised and has remained unchanged ever since.

India chose to retain this structure after 1947. While other colonial remnants such as names of cities and administrative titles were discarded, the financial calendar endured.

The government found it practical, and businesses had already adapted to the dates.

Beyond colonial influence, the April-to-March cycle fits India’s agricultural backbone.

The financial year coincides with the major crop cycle—farmers plant in June-July, harvest by October-March. Government subsidies, credit allocations, and procurement policies are planned.

This synchronisation ensures that government budgets are designed to support agriculture at the right time.

Tax revenue collected by March 31st allows policymakers to allocate funds before the next planting season begins. In a country where agriculture still employs over 40 per cent of the workforce, this alignment is more than just tradition—it’s economic logic.

India’s fiscal year aligns with economies like the UK, Canada, Japan, and New Zealand.

This makes financial interactions smoother for multinational companies and trade partners. While the US and much of Europe follow a January-December calendar as a financial year, India’s decision to maintain the British model keeps it in step with key international markets.