New Delhi: The government’s move to change the financial year from April-March to a different sequence of months will cause a “huge avoidable disruption” at a big cost to business, Assocham said on Sunday.
“Any move to change India’s financial year from April-March to any other permutation and combination would serve no purpose but cause a huge avoidable disruption at a big cost for the country’s trade and industry,” said a statement issued here by the Associated Chambers of Commerce and Industry of India.
The government earlier this week set up a four-member committee to examine the desirability and feasibility of having a new financial or fiscal year. “In any case, different countries follow different financial years and there is no standard accounting practice for the world. So, change to any other calendar would not result in India’s aligning itself with the world,” said the statement, citing Secretary General D.S. Rawat.
According to Assocham, change in the financial year will not only mean a change in book-keeping, but also in the entire infrastructure of accounting software, taxation systems, human resource practices involving huge costs for both big and small industries. The government committee is headed by former Chief Economic Adviser Shankar Acharya, and the other three members are former Cabinet Secretary K.M. Chandrasekhar, former Tamil Nadu Finance Secretary P.V. Rajaraman and Centre for Policy Research senior fellow Rajiv Kumar.
It has been asked to submit its report by December 31. The government’s argument that the current financial year does not allow budget makers to make an assessment of the monsoon does not hold good, Assocham said, since agriculture contributes less than 15 per cent to the country’s gross domestic product (GDP).
“Even if the fiscal year is changed to January-December and the Budget is presented some time in October, the monsoon effect would be clear only for the running year. But then, the Budget is done for the next year for which dependence would continue on the weather forecast,” Assocham argued.
It noted that the existing “fiscal year is even co-terminus with the academic years” in schools and universities. “ Suddenly, we must not bring in such changes which have no apparent advantage. It would create unnecessary hurdles and bureaucratic and systemic delays. At this point of time, India cannot allow any such disruptions,” Assocham said.
Fiscal year is even co-terminus with the academic years in schools and universities.