Glossary
What is a financial year?
In India the books run from April to March. Almost every deadline, return and invoice number follows that year.
Updated
In short
The financial year in India runs from 1 April to 31 March and is labelled by both calendar years, such as 2026-27. SimpleERP numbers documents by this year, for example INV-2026-27-0012.
The financial year in India runs from 1 April to 31 March and is the period for income tax, GST annual returns and statutory accounts. It is labelled by both calendar years, such as 2026-27. Many businesses restart invoice numbering each financial year, because a GST invoice number must be unique within the year and no longer than 16 characters.
Financial year: a worked example
Lakshmi Steel Furnitures at the turn of the year:
| Date | Document | Party | Amount | Counted in |
|---|---|---|---|---|
| 31 Mar 2027 | INV-2026-27-0412 | Sri Murugan Traders | ₹64,500 | FY 2026-27 |
| 1 Apr 2027 | INV-2027-28-0001 | Ravi Stores | ₹29,940 | FY 2027-28 |
| 5 Apr 2027 | Receipt for INV-2026-27-0412 | Sri Murugan Traders | ₹64,500 | Sale stays in FY 2026-27 |
The 31 March sale is 2026-27 income even though the money arrives in April, because income is counted when it is invoiced, not when it is paid.
FAQ
Questions, answered
What is the difference between financial year and assessment year?
The financial year is when income is earned; the assessment year is the following year, in which that income is assessed and the return filed. Income earned in financial year 2026-27 is assessed in assessment year 2027-28.
Can a business choose a different financial year in India?
For income tax and GST, no: everyone uses April to March. A company may keep a different year for group reporting only with permission under the Companies Act, which is rare for small businesses.
Do I have to restart invoice numbers on 1 April?
Not by law, but numbers must be unique within the financial year. Restarting with the year in the prefix, such as INV-2027-28-0001, is the common way to guarantee that and makes each year's series easy to check.
Do I need to close the books at year end?
You need to finish the year's entries, check stock and balances, and give your accountant the reports. Some software then needs closing entries to move profit into retained earnings; others carry it forward automatically. A lock date stops later changes to the closed year.
Run your whole business from one simple place.
Seven days free. No card. Your first GST invoice in minutes.