# Financial Year in India for a Foreign Subsidiary of a December Parent

> Source: https://krystal7.com/insights/year-end-31-march-vs-december-parent-consolidation
> Publisher: Krystal7 Consultants (Krystal7 Innovations Private Limited), Gurugram, India
> Author: CA Nandini
> Published: 14 Mar 2026; updated 24 Oct 2026
> Summary: An Indian subsidiary closes on 31 March under section 2(41) unless the Regional Director approves another year, and its tax year stays April to March.

*Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.*

## AI Overview Summary

- An Indian company's financial year ends on 31 March under section 2(41) of the Companies Act, 2013. Only a holding, subsidiary or associate company of a foreign company may seek another year, to consolidate abroad.
- The Regional Director approves a different financial year under rule 40 of the Companies (Incorporation) Rules, 2014. The Companies (Amendment) Act, 2019 moved this power from the Tribunal, deemed from 2 Nov 2018.
- The tax year under section 3 of the Income Tax Act, 2025 runs from 1 April to 31 March. A December financial year therefore needs a second close for tax, GST and the FLA return.
- Most groups keep 31 March in India and send the parent a December reporting pack. The pack combines three months of one Indian year with nine months of the next.
- The FLA return to RBI is due on 15 July on end March figures, even for a company that closes its accounts on another date.

**An Indian subsidiary of a foreign company closes its financial year on 31 March under section 2(41) of the Companies Act, 2013. The first proviso allows another year, such as January to December, only where the company needs it to consolidate its accounts outside India. The Central Government decides, through the Regional Director. The tax year under section 3 of the Income Tax Act, 2025 stays 1 April to 31 March. Most groups therefore keep 31 March and take a December reporting pack.**

This page is for foreign parents with a 31 December year end and the finance leads of their Indian subsidiaries. It covers the law, the choice between the two routes, the reporting pack, a timeline for both closes, and a worked example. INR 1 crore is 10 million, and INR 1 lakh is 100,000.

## What financial year must an Indian foreign subsidiary use?

Every Indian company, including a wholly owned subsidiary of a foreign parent, uses a financial year that ends on 31 March. Section 2(41) of the Companies Act, 2013 fixes that date. A company incorporated on or after 1 January closes its first financial year on 31 March of the following year. Only an approval under the first proviso changes this.

The [section 2 text](https://www.incometaxindia.gov.in/w/section-2-148) applies the definition to "any company or body corporate". The parent's nationality makes no difference.

The first year can be long or short. A subsidiary incorporated on 10 Oct 2025 had a first year of 173 days, ending on 31 Mar 2026. A subsidiary incorporated on 15 Jan 2026 has a first year of 441 days, ending on 31 Mar 2027. Each must hold its first AGM by 31 December after that first year end.

The year end drives the AGM and the ROC filings. Section 96(1) requires the first AGM within nine months of the close of the first financial year. Later AGMs fall due within six months of each year end. Our guide to [financial reporting for foreign subsidiaries](/insights/financial-reporting-for-foreign-subsidiaries-in-india-the-2026-founders-guide) covers the content of the statements themselves.

## Can an Indian subsidiary adopt its foreign parent's December year end?

Yes, with approval. The first proviso to section 2(41) covers a company that is a holding, subsidiary or associate company of a company incorporated outside India. It must be "required to follow a different financial year for consolidation of its accounts outside India". The Central Government may then allow any period as its financial year, whether or not that period is a year.

The proviso sets three conditions. The applicant must have the foreign link. The different year must serve consolidation outside India. The applicant must apply "in such form and manner as may be prescribed". A domestic group with no foreign holding company cannot use this route at all.

The approving authority has changed. Before the Companies (Amendment) Act, 2019, the first proviso named the Tribunal. The Act (Act 22 of 2019, assent 31 Jul 2019) replaced the first proviso so that the Central Government decides. Section 1(2) of the Act deems this change to have come into force on 2 Nov 2018. A further proviso says that applications already pending before the Tribunal on that date are disposed of by the Tribunal under the earlier provisions.

Rule 40 of the Companies (Incorporation) Rules, 2014 sends the application to the concerned Regional Director. The Companies (Incorporation) Fourth Amendment Rules, 2018 of 18 Dec 2018 inserted rule 40 and Form RD-1. The rule gives the Regional Director 30 days to decide, counted from filing or from the last resubmission. If no order issues in that time, the rule treats the application as approved and an approval order issues automatically. The company files the order with the Registrar in Form INC-28 within 30 days of receiving it.

The application runs in six steps:

1. The board of the Indian subsidiary resolves to apply, with the reasons, the proposed period and the authorised signatory.
2. The foreign parent gives evidence of its year end and its need to consolidate.
3. The subsidiary files Form RD-1 with the Regional Director and the fee. It attaches the grounds, the board minutes showing the votes for and against, and a power of attorney or memorandum of appearance. It also gives details of any similar application in the last five years.
4. If the Regional Director finds a defect or wants more information, the subsidiary answers within 15 days in Form RD-GNL-5. The rule allows two resubmissions at most.
5. The Regional Director passes a written order stating the period allowed, including any transition period, within 30 days.
6. The subsidiary files the order with the Registrar in Form INC-28 within 30 days of receipt.

The phrase "whether or not that period is a year" matters for the switch. A company moving from March to December usually needs one short period, such as 1 Apr 2026 to 31 Dec 2026. The order should state that transition period in so many words.

## Does a December financial year change the tax year?

No. Section 3 of the Income Tax Act, 2025 defines the tax year. It is "the twelve months period of the financial year commencing on the 1st April". The Regional Director's order changes only the Companies Act year. Income tax, advance tax, TDS, GST and payroll all keep running from April to March.

The [section 3 text](https://www.incometaxindia.gov.in/w/section-3-1) allows only one variation. A newly set up business, or a new source of income, starts its first tax year on the date it starts. That first tax year still ends on 31 March. No provision lets a company align its tax year with a December financial year.

The 2025 Act expects the mismatch. Section 206(1)(f) deals with minimum alternate tax (MAT). It requires every company to prepare its statement of profit and loss "for the relevant tax year" when it computes book profit. Section 206(1)(g) covers a company that "has adopted or adopts the financial year" under the Companies Act. Its policies, standards and depreciation must correspond to those used for the financial year falling within the tax year.

A company in the section 200 regime (old section 115BAA) pays no MAT. It still files its return and tax audit on April to March figures. In practice, a subsidiary on a December financial year closes its books twice a year in any case.

Only the Companies Act set moves to December: the audited financial statements, the board's report, the AGM, AOC-4 and MGT-7. The AGM then falls due within six months of 31 December, so by 30 June.

| Calendar | Period | Law | Can it move to December? |
|---|---|---|---|
| Companies Act financial year | 1 Apr to 31 Mar | Section 2(41), Companies Act, 2013 | Yes, with Regional Director approval |
| Income tax year | 1 Apr to 31 Mar | Section 3, Income Tax Act, 2025 | No |
| Advance tax instalments | 15 Jun, 15 Sep, 15 Dec, 15 Mar | Section 408, Income Tax Act, 2025 | No |
| GST annual return (GSTR-9) | 1 Apr to 31 Mar | Section 44, CGST Act, 2017 | No |
| FLA return to RBI | Position at end March | RBI FAQ on the FLA return | No |
| Transfer pricing report (Form 48) | 1 Apr to 31 Mar | Section 172, Income Tax Act, 2025 | No |

Sources: the sections named; RBI FLA FAQ updated 1 Jul 2026; GSTN FAQ on Form GSTR-9.

## Should the subsidiary apply for a December year or keep 31 March?

We advise most groups to keep 31 March and supply a December reporting pack. A December financial year moves one calendar out of six. The company then carries a statutory audit on December figures and a tax audit on March figures, with two hard closes every year.

A December financial year suits few cases. One is a subsidiary whose group auditor insists on an audited December balance sheet for a regulatory filing abroad. Another is a large component where the group auditor would otherwise duplicate a full audit. Even then, we model the cost of the second close before the board resolves to apply.

| Route | Companies Act year | Tax year | Closes a year | Audits | Best fit |
|---|---|---|---|---|---|
| A. Keep 31 March and send a December pack | 1 Apr to 31 Mar | 1 Apr to 31 Mar | One hard close, one December pack | Statutory audit and tax audit on the same March figures; group auditor reviews the December pack | Most subsidiaries of US and European groups |
| B. Apply for a 1 Jan to 31 Dec year | 1 Jan to 31 Dec, once approved | 1 Apr to 31 Mar | Two hard closes | Statutory audit on December figures; tax audit and Form 48 on March figures | A large component whose group needs an audited December balance sheet |
| C. Keep 31 March and let the group consolidate with a lag | 1 Apr to 31 Mar | 1 Apr to 31 Mar | One hard close, one interim cut off | Statutory audit on March figures; the group uses an earlier cut off, such as 30 Sep | Groups whose framework and auditor accept a lag of up to three months |

Route C needs care. A lag only works if the cut off date is within three months of the group's year end. The latest 31 March before the group's 31 December date is nine months earlier, so even route C needs an interim cut off.

## How does a December year end parent consolidate a 31 March subsidiary?

The parent needs the subsidiary's figures at the group's reporting date. Paragraph B92 of IFRS 10 asks the subsidiary to prepare additional financial information as of the parent's date, unless that is impracticable. Paragraph B93 covers the impracticable case. The parent then uses the subsidiary's most recent statements, adjusted for significant events. The gap must be no more than three months. The length of the periods and the gap must stay the same from period to period.

A group on US GAAP follows the consolidation guidance in ASC 810 instead. Ask the group auditor to confirm in writing how far that guidance lets a subsidiary's date differ from the parent's.

Indian Accounting Standard (Ind AS) 110 is the Indian counterpart of IFRS 10. It governs an Indian parent that consolidates its own subsidiaries, so check its text if the Indian company is itself a parent. It does not govern the foreign parent's group accounts, which follow the parent's own framework.

A 31 March statutory year is therefore of little direct use to a December group. The latest 31 March statements before 31 December are nine months old. The group asks for a December cut off, and the Indian team builds it from ledgers that are nine months into the Indian year. That is the December reporting pack.

Some groups accept a September or October cut off with a roll forward to December. The gap must stay within three months and stay the same every year. We agree it in writing with the group auditor before the first year it applies.

## What goes into a December reporting pack?

A December reporting pack is a set of schedules on the group's framework and chart of accounts. It covers the twelve months to 31 December. No Indian law prescribes it. The group's instructions set the content and the deadline, and the group auditor decides how far to test it.

The pack starts from the Indian ledgers. The Indian team closes December as a hard month end, then maps the trial balance to the group chart. It then posts the adjustments that convert Indian accounting standards to the group's framework.

| Schedule | What it holds | Indian source | Common adjustment |
|---|---|---|---|
| Trial balance mapping | Indian ledger codes mapped to group accounts | Accounting software | New ledgers opened during the year |
| GAAP bridge | Differences between Indian standards and US GAAP or IFRS | Indian books and group policies | Leases, revenue cut off, share based payments recharged by the parent |
| Intercompany | Balances and transactions with the parent and fellow subsidiaries | Intercompany ledgers | Transfer pricing true ups, foreign exchange differences |
| Tax | Current tax and deferred tax for the group year | Advance tax challans, the latest return, the tax computation | Three months of one Indian tax year plus nine months of the next |
| Fixed assets | Additions, disposals, depreciation on group lives | Fixed asset register | Different useful lives under Schedule II and group policy |
| Provisions | Gratuity, leave, bonus, warranties | Actuarial reports, HR data | Actuarial valuation at 31 December instead of 31 March |
| Commitments and contingencies | Tax demands, guarantees, legal cases | Tax portal, legal register | Disclosure on the group's thresholds |
| Subsequent events | Events after 31 December | Board minutes, correspondence | Events up to the group's signing date |

We keep a reconciliation between the December pack and the March statutory accounts. The statutory auditor asks for it in April. The group auditor asks for it when the March audit adjusts figures that the December pack already reported.

Our [MIS report format](/insights/mis-report-indian-subsidiary-foreign-parent) shows how the monthly pack feeds the December pack. A finance team that closes every month in India finds the December pack is one more month end.

## What is the timeline for a 31 December group close and a 31 March Indian close?

The two closes interleave across the calendar. The group closes December in January and files its annual report in February or March. The Indian subsidiary closes March and runs its statutory audit from April. It holds the AGM by 30 September and files the tax return by 31 October or 30 November.

The table runs for a US parent with a 31 December year end and an Indian subsidiary in a transfer pricing case. It uses the dates that apply to tax year 2026-27 and calendar year 2027.

| Month | Group (31 December year end) | Indian subsidiary (31 March year end) | Indian reference |
|---|---|---|---|
| January | December pack due on the group's date; group auditor tests the component | Q3 TDS statements by 31 Jan; December pack from Indian ledgers | Rule 219, Income Tax Rules, 2026 |
| February | Group audit fieldwork; Form 10-K for a large accelerated filer due 60 days after year end (1 Mar 2027 for calendar 2026) | Plan the March close; sign the audit engagement; agree the audit calendar | Section 139, Companies Act, 2013 |
| March | Form 10-K due 75 days (16 Mar 2027) for an accelerated filer or 90 days (31 Mar 2027) for other filers after year end; Q1 ends 31 Mar | Final advance tax instalment by 15 Mar; year end 31 Mar; stock and asset counts; intercompany confirmations | Section 408, Income Tax Act, 2025 |
| April | Q1 pack; Form 10-Q due 40 days after quarter end for large accelerated and accelerated filers (10 May 2027) or 45 days for others (15 May 2027, a Saturday, so Monday 17 May 2027) | March TDS deposited by 30 Apr; statutory audit fieldwork starts | Rule 218(2), Income Tax Rules, 2026 |
| May | Q1 review | Q4 TDS statements by 31 May; audit adjustments agreed | Rule 219, Income Tax Rules, 2026 |
| June | Q2 ends 30 Jun | First advance tax instalment by 15 Jun; DPT-3 by 30 Jun | Section 408; rule 16, Companies (Acceptance of Deposits) Rules, 2014 |
| July | Q2 pack; Form 10-Q for Q2 due 40 or 45 days after 30 Jun | FLA return by 15 Jul on end March figures; Q1 TDS statements by 31 Jul | RBI FLA FAQ, updated 1 Jul 2026 |
| August | Mid year budget review | Board approves audited accounts; auditor signs | Section 134, Companies Act, 2013 |
| September | Q3 ends 30 Sep | Second advance tax instalment by 15 Sep; AGM by 30 Sep | Section 96(1), Companies Act, 2013 |
| October | Q3 pack; transfer pricing true up planning for the group year | AOC-4 within 30 days of the AGM; tax audit report and Form 48 by 31 Oct | Section 137, Companies Act, 2013; section 172, Income Tax Act, 2025 |
| November | Group budget for next year | MGT-7 within 60 days of the AGM; return of income by 30 Nov | Section 92(4), Companies Act, 2013; section 263(1)(c), Income Tax Act, 2025 |
| December | Year end 31 Dec; pre close and hard close planning | Third advance tax instalment by 15 Dec; GSTR-9 for the previous year by 31 Dec | Section 408; GSTN FAQ on Form GSTR-9 |

Sources: SEC Form 10-K General Instruction A(2); SEC Form 10-Q General Instruction A.1; 17 CFR 240.0-3(a) on weekend due dates; the Indian sections named.

For FY 2025-26, CBDT Circular No. 07/2026 moved the tax audit report to 21 Oct 2026 and the return to 21 Nov 2026 for companies without a transfer pricing report. Transfer pricing cases kept 31 Oct 2026 for the audit report and Form 3CEB, and 30 Nov 2026 for the return. Our [compliance calendar for 2026-27](/insights/compliance-calendar-foreign-owned-company-india-2026-27) lists every other date. The batch [year end closing checklist](/insights/year-end-closing-checklist-indian-subsidiary-31-march) sets out the March tasks day by day.

## When does the Indian statutory audit happen compared with the group audit?

The group auditor works on the December pack in January and February. The Indian statutory auditor audits the March accounts from April to August. Two audits of overlapping periods therefore happen five months apart, and the second can change figures the first already accepted.

We plan the two audits together. The group auditor's instructions usually reach the Indian component in November or December. We share them with the statutory auditor, so both teams test the same balances once where they can.

The overlap is three months. January to March sits in the December pack for the group's year and in the March accounts for the Indian year. An error found in the March audit for those months reaches the group as a prior period item in its next pack.

| Audit | Period audited | Usual fieldwork | Signed by | Filed or used where |
|---|---|---|---|---|
| Group component work | 1 Jan to 31 Dec, December pack | January to February | Group auditor or its Indian member firm | Parent's consolidated accounts and annual report |
| Statutory audit | 1 Apr to 31 Mar | April to August | Indian chartered accountant or firm under section 141 | AOC-4 with the Registrar |
| Tax audit (Form 26 from tax year 2026-27) | 1 Apr to 31 Mar | August to October | Accountant under section 63 | Income tax portal |
| Transfer pricing report (Form 48) | 1 Apr to 31 Mar | September to October | Accountant under section 172 | Income tax portal |

Our page on the [statutory audit of a foreign owned subsidiary](/insights/statutory-audit-foreign-owned-indian-subsidiary) covers the auditor's appointment and CARO 2020. The batch note on the [statutory audit of a US subsidiary](/insights/statutory-audit-us-subsidiary-india) covers PCAOB and US GAAP issues.

## How do transfer pricing and advance tax work across two year ends?

India tests the arm's length margin on the tax year from April to March. The group often sets its transfer pricing policy on the calendar year. A cost plus subsidiary can then hit the group's target for January to December and still miss it for April to March.

We test the Indian margin quarterly on a rolling April to March basis. Any true up goes on an invoice before 31 March, so it lands in the Indian tax year that needs it. A true up raised in December for the group's year can sit in the wrong Indian year if nobody checks the split.

Advance tax follows the tax year. Section 408 of the Income Tax Act, 2025 sets four instalments. They are 15 percent by 15 June, 45 percent by 15 September, 75 percent by 15 December and the full amount by 15 March. The December pack captures three of those payments for the current Indian year and the final one for the previous year.

Take the group year to 31 Dec 2026. January to March 2026 belongs to FY 2025-26, which the Income Tax Act, 1961 taxes as assessment year 2026-27. Its return in a transfer pricing case is due by 30 Nov 2026. April to December 2026 belongs to tax year 2026-27 under the Income Tax Act, 2025, whose return is due by 30 Nov 2027. Each Indian year has its own transfer pricing test on its own April to March figures.

The batch note on [advance tax due dates](/insights/advance-tax-for-companies-india-due-dates) explains the instalments and interest. Our guide on [transfer pricing between a US parent and its Indian subsidiary](/insights/transfer-pricing-us-parent-indian-subsidiary) covers margins and documentation.

## Which Indian filings stay on a March basis whatever the financial year?

The FLA return, the GST annual return, TDS statements and the transfer pricing report all use April to March or end March. The RBI FAQ on the FLA return covers an entity whose accounts close on another date. It says such an entity "cannot report the information as per the account closing period". It must report end March positions, based on its internal assessment.

This catches subsidiaries that win a December financial year. Their audited balance sheet sits at 31 December. RBI still wants the position at 31 March, so the company prepares March figures for the FLA return in any case.

The FLA return is due by 15 July. The RBI FAQ, updated on 1 Jul 2026, lets a company file on provisional or unaudited figures by that date. Once the audited figures are ready, the company must ask RBI for permission on the FLAIR portal and file a revised return after approval. The FAQ says this applies whatever the size of the variation.

GST runs on the same year. The GSTN FAQ on Form GSTR-9 sets the due date as 31 December of the subsequent financial year. The Government can extend it by notification. Our note on [FDI reporting deadlines](/insights/fdi-reporting-requirements-in-india-for-founders) covers the FLA return in more detail.

## How long does a change of financial year take to plan?

Plan it at least a full year ahead. The board resolves, the parent supplies evidence, the Regional Director decides, and the order goes on record in Form INC-28. The company then needs a transition period that ends on the new date. Its auditor, bank and tax team all need the new calendar before the transition period starts.

We file the application before the transition period begins. A company that wants its first December close on 31 Dec 2027 should hold the order before 1 Apr 2027. That way the transition period runs from 1 Apr 2027 to 31 Dec 2027, and the books open on the new basis.

The Act does not set out a route for going back to 31 March. Our reading is that the company applies again under the first proviso, for the transition period. The Corporate Laws (Amendment) Bill, 2026 proposes an express proviso for that case, discussed below. It is not law.

If the company is also moving its registered office to another state, our guide to [change of registered office in India](/insights/change-registered-office-indian-company) covers the separate Regional Director approval.

## What changed in 2026

The law on the financial year itself did not change in 2026. The tax side did. The Income Tax Act, 2025 replaced the "previous year" with the "tax year" from 1 Apr 2026. New forms also replaced the audit and transfer pricing reports.

| Item | Old rule | New rule | Date | Instrument |
|---|---|---|---|---|
| Authority that approves a different financial year (background, not a 2026 change) | Tribunal | Central Government, through the Regional Director | Deemed from 2 Nov 2018; rule 40 from 18 Dec 2018 | Companies (Amendment) Act, 2019; Companies (Incorporation) Fourth Amendment Rules, 2018 |
| Income tax period | "Previous year" under the Income Tax Act, 1961 | "Tax year" under section 3 | 1 Apr 2026 | Income Tax Act, 2025 |
| Tax audit report | Forms 3CA, 3CB and 3CD | Form 26 under section 63 | Tax year 2026-27 | Income Tax Rules, 2026 |
| Transfer pricing report | Form 3CEB | Form 48 under section 172 | Tax year 2026-27 | Income Tax Rules, 2026 |
| MAT for a company with a different financial year | Section 115JB of the 1961 Act | Section 206(1)(f) and (g) | 1 Apr 2026 | Income Tax Act, 2025 |
| MAT rate | 15 percent of book profit | 14 percent of book profit, as a final tax | Tax year 2026-27 | Finance Act, 2026 |
| FY 2025-26 audit and return dates for non transfer pricing cases | 30 Sep 2026 and 31 Oct 2026 | 21 Oct 2026 and 21 Nov 2026 | Announced 29 Sep 2026 | CBDT Circular No. 07/2026 |

Sources: Income Tax Department guidance on forms under the Income Tax Rules, 2026; sections 3 and 206, Income Tax Act, 2025; CBDT Circular No. 07/2026.

### What has happened since 14 March 2026

The Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026) was introduced in the Lok Sabha on 23 Mar 2026, after this page was first published. It went to a Joint Committee the same day, and the Committee presented its report on 3 Aug 2026. Clause 18(ii) of the Bill as introduced proposes a new proviso to section 2(41).

The proposed proviso covers a company within the first proviso. The Central Government could allow it to realign its financial year to end on 31 March of the following year. It would also let any other company apply "on commercial considerations". PRS Legislative Research's tracker showed no passage in either House as of 23 Oct 2026, and we found no Act or commencement notification. The proposal is therefore not law. Check the Committee's recommendation on clause 18(ii) and any amended text before relying on it.

The Income Tax Act, 2025 came into force on 1 Apr 2026, as scheduled. The CBDT Circular on FY 2025-26 due dates followed in September 2026.

## Worked example

US Inc, a Delaware company with a 31 December year end, owns IndiaCo Private Limited in Pune. The facts are hypothetical. IndiaCo provides software services to US Inc at cost plus 12 percent. It has opted for section 200 (old section 115BAA). Its tax rate is 22 percent plus 10 percent surcharge and 4 percent cess, or 25.168 percent. The Memorandum to the Finance Bill, 2026 states the 22 percent rate and the 10 percent surcharge.

### The December pack revenue for calendar 2026

IndiaCo keeps 31 March. Its operating cost for FY 2025-26 was INR 40 crore. The cost for January to March 2026 was INR 10.50 crore. Its budget for FY 2026-27 is INR 44 crore, spent evenly, so April to December 2026 is INR 33 crore.

1. Revenue for January to March 2026 is INR 10.50 crore × 1.12 = INR 11.76 crore.
2. Revenue for April to December 2026 is INR 33 crore × 1.12 = INR 36.96 crore.
3. Calendar 2026 revenue is INR 11.76 crore + INR 36.96 crore = INR 48.72 crore.
4. At an assumed average rate of INR 88 to the dollar, that is USD 5.54 million.

### The tax line in the December pack

The pack's current tax combines two Indian tax years. Profit before tax is the 12 percent mark up, with no other items in this example.

1. January to March 2026 profit is INR 1.26 crore. Tax at 25.168 percent is INR 31,71,168.
2. April to December 2026 profit is INR 3.96 crore. Tax at 25.168 percent is INR 99,66,528.
3. Calendar 2026 current tax is INR 31,71,168 + INR 99,66,528 = INR 1,31,37,696.

### The advance tax paid inside calendar 2026

FY 2025-26 profit was INR 4.80 crore, so its tax was INR 1,20,80,640. FY 2026-27 profit on budget is INR 5.28 crore, so its estimated tax is INR 1,32,88,704.

| Instalment | Indian year | Cumulative share (%) | Amount paid (INR) |
|---|---|---|---|
| 15 Mar 2026 | FY 2025-26 | 100 | 30,20,160 (the last 25 percent of INR 1,20,80,640) |
| 15 Jun 2026 | Tax year 2026-27 | 15 | 19,93,306 |
| 15 Sep 2026 | Tax year 2026-27 | 45 | 39,86,611 |
| 15 Dec 2026 | Tax year 2026-27 | 75 | 39,86,611 |
| Total in calendar 2026 | Both | Not applicable | 1,29,86,688 |

At 31 Dec 2026, IndiaCo has paid INR 99,66,528 for tax year 2026-27, which equals the tax on nine months of profit. The pack therefore shows no current tax payable for tax year 2026-27. This works only because cost ran evenly. A cost spike between April and December would leave a payable at 31 December, and the 15 March instalment would carry it.

### The same company on an approved December year

Suppose IndiaCo had won approval for a 1 Jan to 31 Dec financial year, after a transition period that ended on 31 Dec 2025. Its filings for calendar 2026 would run as follows:

1. The statutory audit covers 1 Jan 2026 to 31 Dec 2026, and the AGM is due by 30 Jun 2027.
2. AOC-4 is due 30 days after the AGM, so by 30 Jul 2027 at the latest.
3. The tax audit and Form 48 cover 1 Apr 2026 to 31 Mar 2027 and are due by 31 Oct 2027.
4. The return of income for the same tax year is due by 30 Nov 2027.
5. The FLA return reports the position at 31 Mar 2027 and is due by 15 Jul 2027.

The December year saves IndiaCo nothing on the tax side. It adds a second audited close, and its statutory accounts no longer match any figure the tax department sees. That is why we recommend route A for a company like IndiaCo.

## Common mistakes

1. **Applying to the Tribunal.** Some websites still describe an NCLT petition. Fix: apply to the Regional Director under the first proviso to section 2(41), as amended by the Companies (Amendment) Act, 2019.
2. **Assuming the tax year moves with the financial year.** It never does. Fix: plan a March close for tax, GST and the FLA return before applying for a December year.
3. **Building the December pack from an unclosed December.** Accruals, cut off and bank reconciliations then drift. Fix: run December as a full month end before mapping it to the group chart.
4. **Losing the bridge between the pack and the statutory accounts.** The statutory auditor finds unexplained differences in April. Fix: keep a reconciliation from the December pack to the March trial balance every year.
5. **Testing transfer pricing on the calendar year only.** The Indian year can then miss its arm's length range. Fix: test the margin quarterly on a rolling April to March basis and true up before 31 March.
6. **Filing the FLA return on December figures.** RBI wants end March positions. Fix: prepare March figures for the FLA return, even with an approved December year.
7. **Ignoring the overlap months.** January to March appears in both years. Fix: book any March audit adjustment for those months as a prior period item in the next group pack.
8. **Applying after the transition period has started.** The books then need restating. Fix: hold the Regional Director's order before the first day of the transition period.

To have us map both closes for your subsidiary, send the group reporting instructions and the last AOC-4 through our [accounting and bookkeeping](/services/accounting-bookkeeping.html) page.

## Checklist

1. Confirm the parent's year end, framework and reporting deadline from the group instructions.
2. Decide between keeping 31 March with a December pack and applying for a December year.
3. Model both closes, both audits and the tax filings before the board decides.
4. Pass a board resolution if the company will apply, stating the proposed year and transition period.
5. File Form RD-1 with the Regional Director, with the parent's evidence of its year end.
6. File the Regional Director's order with the Registrar in Form INC-28 within 30 days.
7. Agree one calendar covering the December pack, the statutory audit, the tax audit and the AGM.
8. Close December as a full month end and map the trial balance to the group chart.
9. Post the GAAP bridge, intercompany and tax adjustments in the December pack.
10. Reconcile the December pack to the March statutory accounts every year.
11. Test the transfer pricing margin on April to March and raise true ups before 31 March.
12. Pay advance tax on the Indian tax year dates of 15 June, 15 September, 15 December and 15 March.
13. File the FLA return on end March figures by 15 July, and ask RBI for permission to revise it after the audit.

## Key terms

- **Financial year (Companies Act, 2013)**: The period for which a company prepares its financial statements, defined in section 2(41) of the Companies Act, 2013. It ends on 31 March each year. A company formed on or after 1 January closes its first year on 31 March of the next year. (https://krystal7.com/glossary#financial-year-companies-act-2013)
- **Tax year (Income Tax Act, 2025)**: The twelve months of the financial year starting on 1 April, defined in section 3 of the Income Tax Act, 2025. It replaced the "previous year" of the 1961 Act from 1 April 2026. A new business starts its first tax year on the date it is set up. (https://krystal7.com/glossary#tax-year-income-tax-act-2025)
- **Form RD-1**: The general application form a company files with the Regional Director of the Ministry of Corporate Affairs. Under rule 40 of the Companies (Incorporation) Rules, 2014, a holding, subsidiary or associate company of a foreign company uses it to seek a financial year other than April to March. (https://krystal7.com/glossary#form-rd-1)
- **Form INC-28**: The Ministry of Corporate Affairs form a company uses to file an order of a court, the Tribunal or another competent authority with the Registrar of Companies. Rule 40 of the Companies (Incorporation) Rules, 2014 requires the Regional Director's order on a different financial year to be filed in it within 30 days. (https://krystal7.com/glossary#form-inc-28)
- **Group reporting pack**: The financial information an Indian subsidiary sends its foreign parent for consolidation, prepared under group policies such as IFRS or US GAAP to the parent's dates. It is separate from the statutory financial statements that section 129 of the Companies Act, 2013 requires. (https://krystal7.com/glossary#group-reporting-pack)
- **Statutory audit**: The annual audit of an Indian company's financial statements by a chartered accountant under sections 139 and 143 of the Companies Act, 2013, with no turnover threshold. The board appoints the first auditor within 30 days of incorporation, and the members then appoint an auditor for a five year term at the first annual general meeting. (https://krystal7.com/glossary#statutory-audit)
- **Foreign Liabilities and Assets (FLA) return**: The FLA return is an annual RBI return under FEMA that an Indian company files on the FLAIR portal if it holds foreign direct investment or overseas investment at the end of March. The RBI FAQ gives 15 July as the due date for the year ended 31 March. Companies with no such investment in either year are excused. (https://krystal7.com/glossary#foreign-liabilities-and-assets-return)

## Frequently Asked Questions

### What is the financial year of a company in India?

Section 2(41) of the Companies Act, 2013 defines it as the period ending on 31 March every year. A company incorporated on or after 1 January closes its first financial year on 31 March of the following year. A foreign owned subsidiary follows the same rule unless it obtains approval for a different year.

### Can an Indian subsidiary follow its parent's 31 December year end?

Yes, if it needs that year to consolidate its accounts outside India. The first proviso to section 2(41) lets the Central Government allow a different period. The company applies to the Regional Director in Form RD-1 and files the order in Form INC-28. Its tax year under the Income Tax Act, 2025 stays April to March.

### Who approves a change of financial year in India?

The Central Government approves it under the first proviso to section 2(41) of the Companies Act, 2013. Rule 40 of the Companies (Incorporation) Rules, 2014 routes the application to the concerned Regional Director. The Companies (Amendment) Act, 2019 moved the power from the Tribunal, deemed from 2 Nov 2018, and left applications already pending before the Tribunal with it.

### Does the NCLT still approve a different financial year?

No. The Companies (Amendment) Act, 2019 replaced the Tribunal with the Central Government in the first proviso to section 2(41), deemed from 2 Nov 2018. A further proviso kept only applications already pending before the Tribunal on that date under the old procedure. New applications go to the Regional Director in Form RD-1.

### Does a December financial year change the income tax year?

No. Section 3 of the Income Tax Act, 2025 defines the tax year as the twelve months of the financial year starting on 1 April. A company with an approved December financial year still files its return, tax audit and Form 48 on April to March figures. It therefore closes its books twice a year.

### What is a December reporting pack?

It is a set of schedules that an Indian subsidiary prepares for its parent's consolidation at 31 December, on the group's framework. It covers the trial balance mapping, the GAAP bridge, intercompany balances, tax and disclosures. No Indian law prescribes it. The group instructions and the group auditor set its content and deadline.

### How does a parent consolidate a subsidiary with a different year end?

IFRS 10 (paragraphs B92 and B93) asks the subsidiary to prepare additional financial information at the parent's reporting date unless that is impracticable. Otherwise the parent may use statements to a date no more than three months earlier, adjusted for significant events. The latest 31 March statements before 31 December are nine months old, so the parent needs a December pack.

### Which tax year does the December pack's tax charge come from?

Two Indian tax years. For a calendar year group, January to March falls in one Indian tax year and April to December in the next. The pack's current tax combines three months of the earlier year with nine months of the current year. It also adjusts for the earlier year's return.

### Does the FLA return follow the company's own accounting year?

No. The RBI FAQ on the FLA return says an entity whose accounts close on another date cannot report on that closing period. It must report end March positions by 15 July, based on its internal assessment. It may file on unaudited figures, and after the audit it must ask RBI for permission to file a revised return.

### When must the AGM be held with a 31 December financial year?

Within six months of the year end, so by 30 June, under section 96(1) of the Companies Act, 2013. The first AGM is due within nine months of the first year end. The Registrar can extend any AGM other than the first by up to three months for a special reason.

### Does GST follow a December financial year?

No. GST returns are monthly or quarterly, and the annual return in Form GSTR-9 covers April to March. The GSTN FAQ sets its due date as 31 December after the end of the financial year. A company with a December financial year reconciles its GST figures to separate April to March totals.

### How does MAT work for a company with a different financial year?

Section 206(1)(f) of the Income Tax Act, 2025 requires a profit and loss statement for the relevant tax year. Section 206(1)(g) requires accounting policies, standards and depreciation that correspond to those of the financial year within the tax year. A company in the section 200 regime pays no MAT.

### How should transfer pricing true ups be timed with a December parent?

Raise them before 31 March, inside the Indian tax year that needs them. India tests the margin under sections 161 to 173 of the Income Tax Act, 2025 on April to March figures. A true up booked in December for the group's year can leave the Indian year above or below its arm's length range.

### Can an Indian subsidiary switch back to a 31 March year?

The Act does not set out a route for this. Our reading is that the company applies again under the first proviso to section 2(41), for the transition period. The Corporate Laws (Amendment) Bill, 2026 proposes an express proviso that would let the Central Government allow a company to realign its financial year to end on 31 March. The Joint Committee reported on 3 Aug 2026, and the Bill had not become law by 23 Oct 2026.

## Sources

- Income Tax Department (Companies Act, 2013 text), Section 2, definitions, clause (41), accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-2-148
- Income Tax Department (Companies Act, 2013 text), Section 96, annual general meeting, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-96-45
- Income Tax Department (Companies Act, 2013 text), Section 137, financial statements filed with the Registrar, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-137-79
- Income Tax Department (Companies Act, 2013 text), Section 92, annual return, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-92-92
- Income Tax Department, Income Tax Act, 2025, Section 3, definition of tax year, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-3-1
- Income Tax Department, Income Tax Act, 2025, Section 206, minimum alternate tax, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-206-75
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- Central Board of Direct Taxes, Circular No. 07/2026, September 2026, https://www.incometax.gov.in/iec/foportal/sites/default/files/2026-09/Circular-7-2026.pdf
- Ministry of Finance, Memorandum explaining the provisions of the Finance Bill, 2026, rates for advance tax, 1 Feb 2026, https://www.indiabudget.gov.in/doc/memo.pdf
- Reserve Bank of India, FAQs on the Foreign Liabilities and Assets return, updated 1 Jul 2026, https://m.rbi.org.in/CommonPerson/english/Scripts/FAQs.aspx?Id=1171
- Goods and Services Tax Network, FAQs on Form GSTR-9, accessed 23 Oct 2026, https://tutorial.gst.gov.in/userguide/returns/FAQs_gstr9.htm
- US Securities and Exchange Commission, Form 10-K General Instructions, https://www.sec.gov/files/form10-k.pdf
- US Securities and Exchange Commission, Form 10-Q General Instructions, https://www.sec.gov/files/form10-q.pdf
- IFRS Foundation, IFRS 10 Consolidated Financial Statements, https://www.ifrs.org/content/dam/ifrs/publications/html-standards/english/2023/issued/ifrs10.html
- Ministry of Corporate Affairs, Companies (Incorporation) Fourth Amendment Rules, 2018 (18 Dec 2018, inserting rule 40 and Form RD-1) and Companies (Amendment) Act, 2019 (Act 22 of 2019, assent 31 Jul 2019), notifications and Acts listing, https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/notifications.html
- European Union, Commission Regulation (EU) No 1254/2012, endorsing IFRS 10 Consolidated Financial Statements (paragraphs B92 and B93 of Appendix B), https://eur-lex.europa.eu/eli/reg/2012/1254/oj/eng
- US Securities and Exchange Commission, 17 CFR 240.0-3, filing on the next business day, https://www.ecfr.gov/current/title-17/chapter-II/part-240/subject-group-ECFR6c0a8a2a1ef8f20/section-240.0-3
- Lok Sabha, The Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026), text as introduced on 23 Mar 2026, copy hosted by PRS Legislative Research, https://prsindia.org/files/bills_acts/bills_parliament/2026/Corporate_Laws_(A)_Bill_2026_Text.pdf
- Lok Sabha, Joint Committee on the Corporate Laws (Amendment) Bill, 2026, committee page; report presented 3 Aug 2026, https://sansad.in/ls/committee/other-committees/86-Joint%20Committee%20on%20the%20Corporate%20Laws%20(Amendment)%20Bill,%202026-nameH=%E0%A4%95%E0%A5%89%E0%A4%B0%E0%A5%8D%E0%A4%AA%E0%A5%8B%E0%A4%B0%E0%A5%87%E0%A4%9F%20%E0%A4%B5%E0%A4%BF%E0%A4%A7%E0%A4%BF%E0%A4%AF%E0%A4%BE%E0%A4%82%20(%E0%A4%B8%E0%A4%82%E0%A4%B6%E0%A5%8B%E0%A4%A7%E0%A4%A8)%20%E0%A4%B5%E0%A4%BF%E0%A4%A7%E0%A5%87%E0%A4%AF%E0%A4%95,%202026%20%E0%A4%B8%E0%A4%82%E0%A4%AC%E0%A4%82%E0%A4%A7%E0%A5%80%20%E0%A4%B8%E0%A4%82%E0%A4%AF%E0%A5%81%E0%A4%95%E0%A5%8D%E0%A4%A4%20%E0%A4%B8%E0%A4%AE%E0%A4%BF%E0%A4%A4%E0%A4%BF

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