What Is Fiscal Year And How It Differs From Calendar Year

A fiscal year is a stretch of twelve months used by companies or governments to plan budgets, track money, and report earnings. 

Mira runs a fintech startup in Bengaluru. She noticed that nearly 65% of her annual revenue came during the festive season, October to December. In 2024, UPI usage on her app spiked by 120%, and wallet transactions grew by 85%during this period alone.

Using the regular calendar year (Jan–Dec) split this peak across two financial reports, hiding the full impact. To fix this, Mira chose a fiscal year from July to June. In FY 2024–25, her revenue grew from ₹80 lakh to ₹1.3 crore.

This change helped her show clear performance to investors and plan taxes better. Like many fintech startups, aligning the fiscal year with real business cycles gave Mira better control, cleaner data, and smarter planning.

In this blog, we’ll explain what a fiscal year is, how it’s different from the calendar year, and why fintech businesses often use one over the other. 

What Is a Fiscal Year?

A fiscal year is a 12-month period chosen by a business or government for budgeting, financial reporting, and tax payments. Unlike the calendar year (1st Jan – 31st Dec), a fiscal year can start in any month and still cover 12 months.

This flexibility helps organisations align their books with peak business seasons, product launches, or government cycles, leading to more meaningful reports and better planning.

Rajesh runs a digital finance startup in Pune with over ₹5 crore in annual transactions. Nearly 70% of these happen between January and March, due to pre-tax investments and digital payment offers.

To align his reporting with this surge and match India’s tax cycle, Rajesh chose a fiscal year from April 1 to March 31. This way, his accounts close right after the busy quarter, making audits smoother and tax filing stress-free.

Common Fiscal Year Start Dates by Industry

Different industries follow specific fiscal year periods that align with their unique business cycles and strategic needs.
 

Understanding these fiscal year timings helps businesses plan budgets, taxes, and operations more effectively within their industry context.

How Is a Fiscal Year Different From a Calendar Year?

A calendar year always runs from January 1 to December 31. In contrast, a fiscal year is a flexible 12-month period that a company or organisation chooses to suit its business cycle. This helps in aligning reports with actual performance, especially when earnings don’t follow the calendar pattern.

Calendar Year vs Fiscal Year

The calendar year and fiscal year differ in timing and flexibility, affecting how organisations plan and report finances.
 

Choosing between a calendar or fiscal year helps align financial activities with business cycles and regulatory requirements.

Why Fintech Companies Prefer Fiscal Years?

Fintech firms often don’t earn steadily every month. For instance, many see a 70% spike in user signups or loan disbursals during certain months, like college admission season or festive sales. A fiscal year allows them to group all relevant revenue and expenses together for accurate analysis, budgeting, and tax planning.

Aarav runs a student-focused neobank. Between July and September, as colleges reopen, he sees over 60% of new account openings and fee-based transactions. If he followed the calendar year, this income would be split across two reporting periods, making insights less clear.

To fix this, Aarav adopted a fiscal year from 1 July to 30 June. Now, all academic-season income and onboarding costs are tracked in a single cycle, which helps in precise marketing, budgeting, and investor communication.

Fintech Scenarios Where Fiscal Years Make Sense

Certain fintech business scenarios benefit from choosing fiscal years that align with their peak activity periods.

Selecting the right fiscal year start helps fintech firms better track revenue and manage seasonal financial trends.

Rules Set by Tax Authorities

Every country’s tax authority has its own rules for what fiscal year a company can follow. In India, the official financial year runs from 1st April to 31st March. Most businesses stick to this format because it aligns with GST filings, TDS deductions, and income tax return deadlines. 

For example, Ravi runs a fintech SaaS startup in Hyderabad. Since nearly all his clients are India-based, following the April–March cycle helps him stay compliant with local tax regulations and easily meet the 31st October return filing deadline for audited firms.

If a business wants to adopt a different fiscal year:

• It must file a formal request with the tax department
   
• The request must clearly explain why the change is necessary
   
• Approval depends on the company’s structure and compliance history

These rules ensure financial reporting stays standardised and tax authorities can monitor filings more easily.

Why Choosing the Right Fiscal Year Matters?

Selecting the right fiscal year can make a huge difference in how clearly a business tracks revenue, plans budgets, and reports taxes. A well-aligned fiscal year ensures that all income and expenses from major business cycles are recorded in the same reporting period. 

Take the example of Aisha, who works at a wealth management fintech company. Their customer onboarding and peak revenue months fall between July and February. So, they chose a July–June fiscal year, allowing ₹2.1 crore in new revenue to show up in a single financial report.

A suitable fiscal year helps:

• Improve accuracy in financial reports
   
• Avoid revenue splits across years
   
• Make budgeting and forecasting easier
   
• Help investors see real business performance
   
• Simplify tax filing processes

Getting the timing right means more useful reports and fewer errors down the line.

Who Can’t Use a Custom Fiscal Year?

Not every company is free to choose its own fiscal year. Certain business types, especially in countries like the U.S., are legally required to follow the calendar year (1st January to 31st December). 

Dhruv, who runs a software consulting firm structured as a Personal Service Corporation (PSC), wanted to shift his fiscal year to end in December to match his peak revenue cycle. His tax consultant advised that PSCs are restricted by default and must follow the calendar year unless they file additional forms and prove that the change supports a strong business reason.

Such businesses include:

• Personal Service Corporations (PSCs)
   
• S-Corporations (S-Corps)
   
• Entities bound by government contracts or foreign investment guidelines

These businesses often have specific rules or needs that make a fiscal year more practical than a calendar year for their financial reporting.

How Fiscal Years Help with Tax Planning?

A fiscal year lets businesses choose when to report income and expenses. This flexibility is useful for managing tax liabilities, timing deductions, and spreading profits or losses to optimise taxes. Companies with uneven earnings or seasonal expenses benefit the most.

Example: Natasha runs a fintech startup with ₹1.2 crore annual turnover. Her biggest research and hiring expenses fall in July and August. By choosing a July–June fiscal year, she aligns these costs within the same year to maximise tax deductions and reduce year-end tax pressure.

How Fiscal Years Optimise Tax Planning

This table shows how choosing the right fiscal year can help businesses plan taxes smarter. Different strategies benefit various industries by optimising income timing and deductions.
 

Using these strategies, companies can save money on taxes and improve financial health throughout the year.

How to Change from Calendar to Fiscal Year?

Companies can shift from a calendar year to a fiscal year if their business cycles or investor reporting don’t align with Jan–Dec. However, this change requires formal approval and careful planning.

Example: Sanya’s startup raised ₹8 crore from global investors, whose reports follow the July–June cycle. To keep things aligned, she filed Form 1128 with the tax department and officially changed her company’s fiscal year. Her team also adjusted accounting software and reports for a smooth switch.

Steps to Change Fiscal Year:

Changing a fiscal year involves following specific steps to ensure compliance with tax regulations.

1. File Form 1128 with tax authorities
    
2. Provide a valid business reason
    
3. Get approval
    
4. Handle the short year (transition period) carefully, a short year is the transition period that’s shorter than 12 months when switching fiscal years, requiring special tax reporting.

Following these steps helps businesses smoothly transition their fiscal year while staying within legal requirements.

Conclusion:

A fiscal year gives companies the power to pick a 12-month period that works best for them. In fintech, where business is fast and seasonal, using a fiscal year instead of the calendar year makes tracking money, growth, and taxes easier.

Choosing the right year is not just about dates, it helps companies report better, plan smarter, and grow faster. Every fintech leader should think carefully about what works best for their business before deciding.

FAQs

Q: What is the best fiscal year end date?

Most companies choose December 31 as their fiscal year end. If you want a different date, consult tax and accounting advisors.

Q: How many periods are there in a fiscal year?

There are 12 regular monthly periods, plus three special periods: Beginning Balances (BB), C&G Beginning Balances (CB), and Period 13.

Q: Does everyone have the same fiscal year?

No, most use the calendar year, but New York ends on March 31 and Texas ends on August 31.

Q: Do all countries have the same fiscal year?

No, fiscal year dates differ by country and company, unlike the fixed calendar year.
 

Apply for Loans Fast and Hassle-Free

Apply Now

About the Author

LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?