Why does India’s financial year start from April 1?

As April 1 approaches, it is tradition to gear up for the new financial year – put all your money and taxation papers in order, take stock of your investments, analyse your financial strength. For anyone who earns, the urgency of April 1 can be rather compelling. 

But, why do we do so on this particular date? Why does India’s financial year start from April 1 and not January 1? 

To begin with,  it is not just India. Many other countries do so too, including Canada, Japan, New Zealand, South Africa. Aligning with other countries means that trade and economic interactions would be streamlined. 

Most importantly, India follows the April-March financial year because it coincides with the crop cycle. India has been historically an agrarian economy, and hence this close connection between the harvest cycle and the economy is crucial. 

The monsoon season prevails from June to September, and crop sowing takes place in June and July. The harvesting is done between October and March, aligning with the year’s end. This synchronisation helps the government to make plans for the agriculture sector, and the farmers as well as agrarian businesses can plan their year ahead accordingly. 

The April-March year also coincides with Vaisakhi or the lunar calendar. The Hindu New Year also coincides with the financial year. 

The British influence also cannot be written off. India followed the British calendar before independence, and continued the same concept later on too. The British tax year starts from April 5.