Tag: Financial

10 Steps To Organize Your Personal Finance In New Financial Year
31st March has just passed. Was the last month of the gone financial year full of a hassle for you? Do your last-minute tax-saving plans always lead you to invest in the wrong instruments? Well, if your answer is yes, you are at the right place. In this blog, we have brought you tips on how to organize your personal finance in the new financial year.

A book named “Personal Finance” written by E. Thomas Garman and Raymond Forgue defines Personal Finance as the study of resources, both personal and family, that can be considered important from a financial perspective. It involves spending, saving, protection, and investment of these financial resources.

Financial freedom is available for those who learn about it and work for it. – Robert Kiyosaki

Key Aspects of Personal Finance

The reason most people fail in making a successful financial plan is a lack of awareness. Although people make a lot of effort while managing their finances, they often overlook important areas. In this section, we will discuss the 5 key aspects of Personal Finance.

Saving

Warren Buffet has said “Do not save what is left after spending, but spend what is left after saving. This is indeed a great piece of advice. You cannot predict when the financial crisis will hit you. Therefore, it is better to remain prepared.

Savings help you to keep calm in such situations and look for a solution. As per experts, your optimum savings should be equal to your six months expenses.

Earlier, the most preferred option for savings was a “Saving account”. However, recently a lot of people are moving towards debt instruments such as liquid funds for saving.

There are a number of reasons for this shift. Foremost, Liquid funds have minimal credit and interest risks attached. Further, you can easily withdraw money in small time. Also, though there is no guarantee, these funds provide you with better returns than your savings account.

Investing

Investing

As Benjamin Graham said, “Successful investing is about managing risk, not avoiding it”. Many people confuse saving and investing to be the same. Well, they are not.

While investing, you are actually using your money to make more money. There are plenty of investment options available in the market such as mutual funds, real estate, stock market, etc.

To choose the correct investment options organize them into short, long, and mid-term goals. The option best suited for your requirement, horizon, and time frame should be chosen.

Financial Protection

As per WHO, financial protection is the heart of Universal Health Coverage (UHC). If chosen well, it gives a safety net to you and your loved ones. The key is to ascertain prepayment and pooling of resources to save you from financial hardship.

Financial protection ensures that these impromptu situations do not hamper your savings and investment plans. Insurance is classic financial protection. Basically, four types of insurance plans are considered mandatory for an individual. They are Term insurance, Health insurance, Mortgage Protection, and Personal accident insurance.

Tax Plan

Tax Planning

You can save your tax by identifying the right kinds of investments and purchases. In India, there are almost 70 exemptions and deductions that can be used to lower your taxable income.

Section 80C and 80D of the Income Tax act may help you save a lot on your income. Under Section 80C, you can reduce your taxable income by investing in certain tax-saving instruments such as EPF, PPF, NPS, NSC, etc.

On the other hand, Section 80D allows you to save tax on the money you pay as a premium for the health insurance of you and your family.

Retirement Plan

“Planning for retirement is not something we can put off until a later date. The time to plan is now.” Here Bob Reid has correctly described the need for a retirement plan.

Unless you are planning to become a liability to your kids, you should start planning for your retirement now. This is actually because you never know when you will stop working.

The greater life expectancy and frequent inflations have further enhanced the need for a retirement plan. Investing in sources of steady income can be the best option. Life insurance annuity, rental income, and mutual funds are good options to consider for your retirement plan.

How to Organize Your Personal Finance in the New Financial Year?

Now that we know the key aspects, we are ready to organize our personal finance. We have listed tips to help you organize your personal finance in the new financial year.

1. Start Early

“Haste makes Waste”. If you have tried to plan your finances and investment in the last month of the financial year, you can certainly relate to this statement. During the last-minute rush, not just you but investors are also impatient. Thus, there are maximum chances of making a wrong decision. Therefore, it is better not to wait for March to plan your finances. Starting early helps you to make calculated decisions. Put your financial plan in place in the month of April itself.

If you wish to invest in PPF or SIPs in your equity-linked saving schemes (ELSS funds), better start at the beginning of the new financial year.

2. Plan your Budget

Living within your means is important. Plan your expenditure and savings for the next year in the beginning. Go through your previous year’s income and expenses to make the right decision.

Set your financial goals and decide your cash flow accordingly. If you have received a good bonus, try to prepay your loans, at least partially. Our income and aspirations play a major role in deciding our financial plan.

This would help you to identify your spending. So, you can strike the right balance between spending and savings. If cutting down your expenditure is not an option, try using smart spending means such as loyalty programs, credit cards, or some apps.

Try competing with your previous month’s budget. It would help you grow as a smart spender. Try setting goals and make efforts to reach them.

3. Create an Emergency fund

This is the fund that will help you take care of the unexpected expenses in “just-in-case” situations. Usually, financial experts advise keeping 20% of your every paycheck in this fund.

As per Forbes, you can create an emergency fund by simply following a few steps. They are:
- Setting up a target date to start your fund.
- Reallocating some amount from existing assets.
- Drawing a monthly commitment.
- Creating a separate account for gathering.
- Channelize extra income towards this fund.
4. Determine your insurance needs

Determine Your Insurance Needs

Insurance is not only meant to save tax, rather it is a means to serve critical needs. The beginning of the new financial year is a good time to determine if you have adequate insurance coverage.

The finance experts believe that your insurance cover must be 10 times your annual income. Also, reviewing your insurance needs as per your changing life goals is important for example, if you are planning to get married, have a child, or buy a house.

As per a Swiss report, people in India are awfully uninsured. The protection gap is almost 83% wide. This means that if the Rs 100 insurance cover is needed only Rs 17 are spent by the policyholders.

To evaluate the adequacy of your insurance cover you can also use Human Life Value (HLV) tools. These tools are available online and help you assess your financial requirements based on your liabilities, increments, earning capabilities, and your age.

5. Review your investment portfolio

It is always a great idea to review your investment portfolio at the beginning of the new financial year. Track the market performance of your existing assets to understand how it has changed since last year.

Readjusting your investment strategy is especially important if you have experienced any major life changes in the last year. For example, if you are nearing retirement, you may want to invest in a good retirement plan. Evaluate your needs and invest accordingly.

6. Plan to spend your annual bonus

If you have received an annual bonus do not let the money get fritter away. Plan your spending well. For example, if you have a loan you can partially or completely prepay it. Or if you have a child try spending the bonus on good Children’s plan.

Even if you have no such liability, this does not mean you can just cross your budget and waste that money. Try channelizing it towards your savings or emergency fund. This will help you meet your financial goals.

7. Plan your taxes

Planning your taxes at the beginning is a great way to start your new financial year. It is actually a part of the financial discipline. To initiate tax planning, you first need to identify your tax slab. The tax rates are different for different levels of income. If you know your tax slab, you can easily calculate your tax outgo. This will help you to figure out your tax-saving requirement.

To analyze the scope for reduction, first, evaluate your existing tax-saving investments. This is crucial as there is a maximum limit for reducing the tax outflow.

A number of tax-saving instruments are available to choose from such as PPF, NPS, tax-saving mutual funds, etc. It is also important to distribute your tax investment across the year instead of doing it in the last month. However, it is equally important to understand that investment goals must be derived from your financial goals and not for the purpose of tax savings.

8. Limit your debts

It sounds easier said than done. Anyways who wants to remain in debt? It just happens. However, as per Central Bank, there are certain strategies to keep your debts in check. They are:
- Do not buy anything which you cannot afford without a credit card.
- Completely pay off your credit card balance, every month.
- Focus on your needs not wants.
- Plan your budget as per your financial goals and requirements.
- Limit the number of cards you own.
- Maintain a master sheet to track your expenses.
9. Monitor your credit score

It is almost impossible to not own a credit card in today’s world. However, it is crucial to managing your credits correctly. A solid credit report is required if you are planning to obtain a loan or mortgage a property. For this, you better pay off your balance every month or at least try to keep a minimal credit utilization ratio.

The most popular credit score these days is FICO (Fair Isaac Corporation) score. The factors that determine your FICO score include payment history (35%), length of credit history (15%), amounts owed (30%), credit mix (10%), and new credit (10%).

It is also a good idea to subscribe to credit agencies that provide you with regular updates on your credit score. This would not just help you in identifying mistakes but, also to detect any fraudulent activity.

10. Maintain financial records

It is always important to keep your financial records organized. This will help you track any discrepancies at later stages. Traditionally, a folder or drawer is used to keep all your bill and payment receipts. However, this increases the risk of missing or forgetting one or more of them.

Currently, a number of apps are available to keep track of your finances. These online services help you separate the old bills and receipts from the new ones. Also, you can set reminders for upcoming payments. This saves you from the hassle of looking through every document in your folder while trying to find one.

Conclusion

Therefore, it is important to understand the five key aspects of personal finance i.e. savings, investment, financial protection, tax plan, and retirement plan before you start to plan. Moreover, organizing your personal finance in the new financial year using the tips mentioned above would certainly help you get more out of your available assets.

Hope you enjoyed reading this article and learned something. Keep visiting for more fun and knowledge.

FAQs

How do I write a financial plan for the new year?

Start early, create an emergency fund, plan your taxes, and monitor your credit score.

Which financial plan should be set first?

Creating an emergency fund should be your priority because you never know when a crisis will hit you and you’ll be buried under debts.

What is the 50 30 20 budget rule?

According to the 50 30 20 budget rule, you should allocate 50% of your income to needs, 30% to spending, and 20% to savings.
April 15, 2022
Why Did Better.com Fired 3000 Employees and Where Did They Go Wrong?

When you start a business, apart from ideas, funds and a proper plan, you need people to work on that plan and execute it in a perfect way and those people are your employees, they are the driving force of an organization. Your employees are your assets, they are the ones who can make or break your company because a company is as good as its employees.

An employee’s efficiency can be found in the productivity of your business, they serve the customers along with you. Therefore, if you want to keep your business alive, you also need to take care of your employees, not only through monetary terms but from all around. Your internal public is as valuable as your external public.

Recently, Better.Com has fired 3000 employees, without any prior notice. In this article, we will talk about the reason for firing so many employees and what did the company do wrong. So without any further ado, let’s get right into the business.

“Employees are the key to your success with customers. Treat them well!” — Ron Kaufman

About Better.com
Fired 900 Employees Over Zoom Call
The Backlash From the Public
Termination of 3000 Employees
Reasons for the Lay Off
Where did Better.com Go Wrong?

About Better.com

Better.com is an American company that provides mortgage lending and financing-related services through its online platform. The company was founded in the year 2014 by Vishal Garg and started its first business, Better Mortgage in 2016.

Vishal Garg, Founder and CEO of Better.com

The company is the direct lender of conventional loans, jumbo loans, fixed-rate mortgages, adjustable-rate mortgages and refinancing loans. The online mortgage company is backed by Softbank.

One of the attractive features of the company is that it does not take loan origination fees while providing loans. The headquarters of the company is situated in New York, United States of America.

Fired 900 Employees Over Zoom Call

Things took a wrong turn when, the digital mortgage company in 2021, on the month of December fired 900 employees over a Zoom Call. In a simple Zoom call, CEO Vishal Garg of the company announced that 900 of the employees, who were part of the Zoom call, are fired from their job.

The sudden terminations of those employees were met with a negative response around the world. The reasons for the termination were the lack of productivity and efficiency of the employees.

The Backlash From the Public

The sudden move by the company and its CEO received severe backlash from the world, as no prior notice was provided to them before their termination and created a negative impression of the company in the business industry.

The move was done after the company received a $750 million cash infusion. Following this incident, the CEO of the company, Vishal Garg stepped down from his position and took a break after being criticized by the public for this step.

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Termination of 3000 Employees

After Garg’s break, he returned to his prior position. The situation grabbed the headlines and the action was criticised by general people for being extremely insensitive.

As mentioned above, before firing the 900 employees, Better.com has done a similar deed last year as well. After just a couple of months later, on March 8, Better.com again has sacked 3000 of its employees from their position in the United States of America and India.

The employees received their cheques in the payroll app and the way they got sacked was not at all in a good way as most of their computers got shut down in the middle of their work.

Amanda Bullard, Better.com

Reasons for the Lay Off

The first reason for the termination of the employees is the rise of interest value which has led to a drop in the origination value. The company let 35% of its workforce go. The company again said that efficiency is quite a big concern, so they are also laying employees off for that reason.

Where did Better.com Go Wrong?

The first fault is the lack of communication. Any kind of business need communication, lack of it will lead to problems only. Better.com has done the same thing twice, without having proper communication with their employees, the company is firing them. The employees were not given notice of their termination. This has created a negative impression of the company around the world.

Employees shared their experiences on different social media platforms, which has again created a stir. Bad word of mouth has been spread regarding the company, which somehow is affecting the company’s reputation.

Kiana Brown, Better.com

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Conclusion

As mentioned before the company is as good as its employees and the employer has every right to fire those who are not efficient enough and are not able to provide productivity. However, firing the employees must be done in such a way that it will not crush them entirely, proper communication is necessary while doing that.

FAQs

Why is Better.com laying off employees?

Better.com laid off employees citing the reason efficiency is a big concern for the company.

Who founded Better.com?

Better.com was founded by Vishal Garg in 2014.

When was Better.com founded?

Better.com was founded in the year 2014 by Vishal Garg.

March 14, 2022
How UPI Payments Impacted FinTech Industry?
The term “FinTech” is the combination of finance and technology and is referred to the provision of new solutions in the field of finance by IT venture companies. New business models are being created one after another, particularly in the area of B to C services using the Internet. The major difference between these new businesses and traditional finance companies is their thought regarding IT investment.

The use of information technology is generating dramatic changes in financial services making it more easier and efficient to use. Payment services were previously having the players like banks and credit card companies, but now variety of new players have entered the field making it more easier and beneficial for the people of the country. Correspondingly, UPI payments impacted FinTech Industry.

Why is UPI growing at such a rate?
How UPI impacted the fintech industry in India?
Conclusion
FAQs

Why is UPI growing at such a rate?

UPI Payment Apps
- One of the reasons why UPI services has been adopted globally with trust. When you use UPI to pay for things, card information is not shared with merchants, meaning that even if the merchants are hacked, people using UPI payments are safe from leaking information.
- Another reason why UPI payments is revolutionizing the Fintech Industry is its hassle free approach to pay and register. All that is required to validate your UPI is simply an authentication of your Aadhar card, your finger prints are scanned and your mobile phone number is verified.
The Indian society have a strong fear of fraud, both in physical retail and online. Although governmental interventions to use digital transfer modes for payments had taken place in India, it is still a very cash-based society. If we take a look at credit card usage, which is a basic form of digital payments, adoption of such payment services are low in the states of India as compared to the US, UK, Japan or South Korea. Building trust in digital payments services is the key.

The take-up of digital payments or any other FinTech services will be about how the FinTech industry can provide customers with comfort and trust, enabling them to feel safe and secure using the service. The use of mobile is already driving the biggest change in financial services history. Mobile is considered as the fastest mass adoption of a technology in history than any other technology. There are already 7.2 billion mobile devices today. With UPI payment services, mobile was only 1% of all transactions in 2010, it is now above 45% in 2019.

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How UPI impacted the fintech industry in India?

FinTech Industry

CEO of National Institution for Transforming India (NITI), Amitabh Kant in an interview had said that Fintech market in India is likely to expand to $31 billion in 2020 and this owes largely to the use of UPI payments. This is mostly because India is the only country in the world with over a billion mobile connections and bio-metrics, provides an enough scope and opportunity for penetration of fintech technology.

Indian FinTech market is estimated to jump to $140 billion in 2023 and by 2025, Fintech industry valuation is estimated at $150-160 billion.
- UPI has made payments easier: Gone are the days, when people used to carry huge bundle of cashes as they traveled or visited a restaurant. With the introduction of UPI payments, it is now become an easier and more secure while travelling.
- UPI has made the buying and selling easier through e-commerce: UPI has made the buying and selling through fintech app solution, easier for the e-commerce companies. When a diverse range of devices are connected via the Internet of Things (IoT), it possible to obtain historical data concerning peoples’ daily activities. Using these life-logs, the e-commerce platforms are able to analyse patterns of regular and illicit activity, increasing their ability to detect illicit activity.
- Enhancing trust for both customers and businesses: UPI payments has initiated and created a trust between the buyers and sellers. This is due to the privacy that is maintained within the system. UPI transactions are always payer initiated and demands the approval of the payer by an OTP. This is focused on person-to-person (P2P) transfers.
- Payments via UPI are extremely quick: Another noteworthy feature of the UPI that has created a huge demand for it in the Fintech industry is that the payments or transactions are done extremely swift. There is no lag and delay which helps in the smooth flow of business.
- With UPI you can directly link your account to the BANK and there is no need for virtual wallets: There are many virtual wallet companies like Paypal, PayTM, Mobikwik etc, which requires you to put some money within the virtual wallet, but with the use of UPI payment you can directly use the money from your savings account.
- You may also keep a record of your bank transactions through UPI: UPI also enables you to keep a record of the withdrawals and deposits, this saves time for people who would have otherwise visited the bank to update their passbooks. This creates a major benefit for the elderly people who do not need to visit banks and they can transfer whatever amounts they want through an application.
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Conclusion

UPI in the last two years has made another innovation where you can request credit through your overdraft (OD) account. This latest value addition eliminates the risk of fraud credit card calls and the risk assessment involved through traditional credit facilities from banks. Thus we can rightly say that a culture of innovation and entrepreneurship has emerged with the use of UPI in the Fintech Industry and we could not have been more proud. It Revolutionised the idea of daily payments and also improvised on the security of transfers.

FAQs

What is UPI full form?

UPI’s full form is Unified Payments Interface.

What is UPI in banking?

Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI).

What is a FinTech industry?

FinTech stands for Financial technology. FinTech is an economic industry that includes companies that use technology to make financial services quick and efficient.

What is UPI Technology?

UPI is a unified interface of NPCI that merges various banking services and wallets payment and other features under one payment system. One UPI ID and a pin are generated. A UPI ID and Pin are used to send and receive money and real-time bank-to-bank payments can be made.
May 18, 2021
Reasons Why Nomura saw a loss of $2.3 Billion

Nomura Holdings which is a Japanese brokerage house has recorded a steep loss for the first quarter of 2021. Nomura had also booked a loss in the previous financial year amidst the Covid pandemic. Let’s look at the reason given by Nomura holdings regarding the loss and the further steps taken by the company.

About Nomura Holdings
Reason and Amount of loss
Past of Archegos Capital Management
Strategy of Nomura Holdings
Further Steps
Risk Management
FAQ

About Nomura Holdings

Nomura Holdings is a Japanese-based financial holding company that is one of the most important members of Nomura Group. The company was established in the year 1925 and has its headquarters located in Tokyo, Japan.

The company is part of the financial services, consulting and financial management industry. They provide their services to individuals, institutions and government customers on a global basis.

Some of the services provided by Nomura Holdings are Financial Services, Security Services, Retail Banking, Investment Management, Asset Banking and Asset Management.

Reason and Amount of loss

On 27 April 2021, Nomura Holdings has said that its losses from the collapse of a U.S investor Archegos Capital Management would amount up to USD 2.87 billion. This has put the Japanese-based Nomura Holdings under a steep loss.

In the first quarterly report, the company has recorded a loss of 245.7 billion yen which is related to the transaction with Archegos Capital Management. In relation to the same transaction, the company said that it will further book a loss of up to 62 billion yen in the current fiscal year.

In the first quarter, the overall loss booked by Nomura Holdings was around 155 billion yen (Around USD 1.4 billion). This is considered to be the first quarterly loss of Nomura Holdings in a year.

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Past of Archegos Capital Management

Nomura Holdings was one of the string of banks that were exposed to Archegos which is a New York-based investment company and family office which is run by Bill Hwang.

On 29 March 2021, Nomura holdings had already warned about the loss of around USD 2 billion which would arise from the transaction of the U.S client. Earlier Credit Suisse has also faced losses worth billions of dollars in regards to the transactions with Archegos.

Even the rival bank Swiss Bank UBS said on 27 April 2021 that it had lost an amount of up to USD 774 million from the trades which were linked to the same company. The quarterly loss of Nomura Holdings had increased to USD 2.3 billion as there was a decline in the value of the collateral.

As of 23 April 2021, the company has disposed of 97 % of the positions that are related to Archegos. The loss has occurred at Nomura’s prime brokerage unit through a business dealing with family offices and hedge funds.

Strategy of Nomura Holdings

Nomura Holdings has said that the company has reviewed all its positions in the units as well as the loans provided to the investors. The review has not shown any transactions which are problematic compared to Archegos.

The company said that it would focus on strengthening its framework in regards to the management of its risk by working together with the experts in the industry outside the company.

The CFO of the company Takumi Kitamura has said that this loss wouldn’t change the focus of the company on developing a business platform globally and doing business with the wealthy and risky investors.

He added that there wouldn’t be any change in their strategy of doing business especially with the overseas business that includes the trading business as well.

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Further Steps

The CEO of Nomura Holdings, Kentaro Okuda had expressed a deep regret in regards to the huge loss faced by the company saying that otherwise, it would have been a great year for Nomura Holdings. He has promised that it wouldn’t be repeated.

He added on saying that they have created a lot of anxiety for their customers and shareholders and said that they will take the issue very seriously and make sure that such as situation will not repeat in the future by upgrading their risk management.

Okuda said that his responsibility is to create a platform to manage risk in a better way. The huge loss was recorded after Okuda finished his first year as CEO of the company. He was formerly the head of Nomura’s U.S operations.

Risk Management

In order to strengthen the risk management, the company has appointed a new CEO who was the former senior of J.P Morgan. The company stated Christopher Willcox was the new co-CEO and President of Nomura Securities International.

Willcox has worked with J.P Morgan and is a former CEO of J.P Morgan Asset Management. He has also worked with the Citi group for a term of 15 years.

FAQ

Is Nomura a Japanese bank?

Nomura is a Japanese financial holding company and a principal member of the Nomura Group.

What are the big 4 investment banks?

JPMorgan Chase, Goldman Sachs, BofA Securities and Morgan Stanley are the big 4 investment banks.

What is the meaning of margin call?

A margin call is usually an indicator that one or more of the securities held in the margin account has decreased in value. When a margin call occurs, the investor must choose to either deposit more money in the account or sell some of the assets held in their account.

Conclusion

The company has decided to focus on providing prime brokerage services to wealthy investors and to continue to do business with family offices. Kitamura added on saying that Family offices will continue to be one of the most important clients for them.

April 30, 2021
Financial Year: 2019-20 Clarifications
Financial year or Fiscal year is the a period of twelvemonths in which governments, companies,business and individual citizens calculate their budgets, profits, and losses. They comply with their tax liability and calculate their current market position considering their expenditure. Financial year is often used in business to compare with the calendar year. This fiscal year is a one-year period that companies and governments use for financial reporting and budgeting.

A fiscal year is most commonly used for accounting purposes to prepare financial statements. A fiscal year is important to publicly-traded corporations and their investors since it includes revenue and earnings making year-to-year comparisons possible. For tax purposes, the Internal Revenue Service (IRS) allows companies to be either calendar-year taxpayers or fiscal-year taxpayers.

It comprises of 12 months which is generally 1 April to 31 March. Although a fiscal year can start on January 1st and end on December 31st, not all fiscal years correspond with the calendar year. For example, universities often begin and end their fiscal years according to the school year.

In India we follow the financial year 1st April to 31st March. This financial year is a legacy left behind by the British. It was the East India Company which first brought this concept of 1st April to 31st March as the Financial or Fiscal year while they were ruling the undivided India. From then we all are following the same and we have made it part of our life.

Meaning of Financial Year and Previous Year according to Income Tax Act,1961

In the Income Tax Act, 1961, Sections 2(9) and 2(34) of defines the ‘Assessment Year’ or Financial year’ and ‘Previous Year’ respectively.

As per Section 2(9) of the Income Tax Act, 1961 the term ‘Assessment Year’ means the period of twelve months commencing on the 1st day of April every year. The Assessment year is the financial year of the Govt. of India during which income of a person relating to the relevant previous year is assessed to tax.

Every person who is liable to pay tax under this Act. files return of income by prescribed dates. These returns are processed by the income tax department officials and officers. This processing is called assessment. Under this income returned by the assessee is checked and verified. For instance, Assessment Year 2020-21 is a time of a year beginning from 1 Apr. 2020 and finishing with 31 March 2021.

While, as per section 2(34) of the Act, “Previous Year” means the previous year as defined in section 3.
Section 3 of the Act defines previous year as follows:
For the purposes of this Act, “previous year” means the financial year immediately preceding the assessment year. Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.

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In fact, many nations in the world such as Japan, United Kingdom, Canada, New Zealand, Hong Kong, South Africa follow Fiscal Year of April to March, each year. But there are only 33 countries following the traditional old April to March financial year. Rest of other developed countries like Spain, Italy, France, UAE, etc. follow the Calendar year i.e. January 1 to December 31, as their financial year. As majority of the developed countries follow Calendar year as financial year, countries following old financial year are now facing few drawbacks to get in align with rest of the developed countries.

Government of India is thinking of change of Financial Year (April to March) to Calendar Year (January to December). Prime Minister, Mr. Narendra Modi had given a proposal in this respect in a NITI Aayog’s meeting. If this would be done, it would close the chapter of Financial Year of April to March introduced by Britishers in 1867,150-year ago. Implementation of Calendar Year in India as Financial Year may get operational issues first year in this way. Hence, it will be necessary to bring the important changes, data right now a half year prior before carrying the enactment with this impact.

As government of India has been taking steps along with Ministry of Corporate Affairs and Income Tax Department to make this amendment which will not only be challenging for common citizens but also for organizations & government but eventually it will lead country into better position overall.

Pros of this Amendment will be:
- This amendment will also benefit many MNC firms in India as they will not have to prepare different sets of accounts for different accounting period which will also ease their work at the time of consolidation of accounts. It will be easier for the companies to consolidate their data and manage their report for their respective holding companies.
- This will likewise assist the administration to estimate their spending arrangements, as this will adjust the monetary year to the critical storm cycle. Additionally, this will help in better designation of assets to the farming area, in light of the nature of storm in that specific year.
- International tax payers will also be quiet at ease due to no change in the period of taxation of their home country and other countries.
Cons of Amendment will be:
- It will prompt numerous different changes, for example, moving Parliamentary Sessions, spending introduction in November-December, redesigning charge foundation and laws, charge appraisal year which could prompt disarray.
- With the whole framework of bookkeeping programming and tax collection frameworks changing, there could be an enormous one-time cost for both of all shapes and sizes organizations.
- Much the same as the past demonetization and GST usage, changing the monetary year may likewise make a little vulnerability. Subsequently, this move should be very much arranged and executed to evade any disturbances in the economy.
No Extension of Financial year

Lately, a post of a newspaper got viral on social media because demand to extend the financial year was in light of the shutdown that was put in place to combat the COVID-19 outbreak. In the article, it can be read that ‘fiscal 2019-20 will end on 30 June 2020 while fiscal year 2020-21 will begin on 1 July 2020 but ends on 31 March 2021’ in the case of RBI. The article does not claim that RBI extended its current financial year till 30 June 2020 because it is already till 30 June 2020.

Even though 15-month year would look financials look better compared to the previous year,the government through a notification, clarified that it has not changed the beginning of its financial year from April 1 to July 1 – as is being claimed by some social media posts. The beginning of the current fiscal year (2020-21) would begin normally on April 1.

The finance ministry said, “There is no extension of the financial year The government has not extended the current 2019-20 fiscal year and it will end as scheduled on March 31.” PTI erroneously reported that the new financial year will start from July 1. The news alert and the related story have been withdrawn. “

Finance Ministry released a Notification to discard Rumours

Industry has been demanding extension of fiscal year by three months in view of the economic impact caused by outbreak of Covid-19. The administration’s explanation comes after a Gazette warning, which related to an adjustment in dates for assortment of stamp obligations, was doing the rounds in certain circles. Hence officials said that date of applicability of stamp duty has been changed from April 1 to July 1.

The finance ministry in a statement said amendments have been made to the Indian Stamp Act by deferring the effective date of applicability from April 1 to July 1, 2020. To rationalise and harmonise the system of levying stamp duty and help curb tax evasion, the government had through the Finance Act, 2019, amended the Indian Stamp Act, 1899. Certain changes were to be effective from April 1, 2020. Through a notification, the revenue department said these amended provisions will come into effect from July 1, 2020.

What Made up to these Rumours?

The coronavirus flare-up couldn’t have come at a more terrible time. It is the period of March and there are numerous monetary cutoff times that fall right now. These incorporate filing of income tax, , connecting of PAN and Aadhaar and so on.

Everywhere throughout the nation, urban communities have been locked down , curfews have been forced and individuals are telecommuting. This is on the grounds that individuals have been advised to keep away from crowded places.

“This notification pertains to few amendments in Indian Stamp Act wherein stamp duty on security market instruments shall be collected through stock exchanges and depositories. This was to get implemented from 1.4.2020 but is now forwarded to 1.7.2020 due to current situation,” said government officials. – SOURCES

Also Read: Get help with tax preparation and planning

The administration’s explanation comes after a Gazette warning, which related to an adjustment in dates for assortment of stamp obligations, was doing the rounds in certain circles. Therefore, the government announced that Implementation of Stamp Act changes deferred by 3 months till July 1 which was misinterpreted as change in financial year as auditors as well as tax practitioner were in a view with the goal that business houses can close their books of records appropriately to broaden the money related year was considering the shutdown that was set up to battle the COVID-19.
April 5, 2020