Fiscal Year refers to a 12-month period used by governments, companies, and organizations for accounting, budgeting, and financial reporting purposes. Unlike a calendar year, which runs from January to December, a fiscal year can begin and end on any date, depending on the organizationís policy or the countryís regulations. The fiscal year helps standardize financial reporting and comparison of performance across periods.

In India, the government and most businesses follow the fiscal year from April 1 to March 31 of the following year. For example, the period from April 1, 2024, to March 31, 2025, is referred to as Fiscal Year 2024ñ25 (FY25). This structure allows alignment with the governmentís budget and taxation cycle, simplifying compliance and planning.

The fiscal year plays a crucial role in financial management. It determines the period over which companies prepare financial statements such as the balance sheet, income statement, and cash flow statement. It also sets the timeline for tax filings, audits, and investor reporting. Publicly listed companies disclose quarterly and annual results based on their fiscal year to provide transparency and accountability to shareholders and regulators.

Globally, fiscal years vary. For instance, the United States government follows an October 1 to September 30 fiscal year, while companies in Japan typically operate from April to March, similar to India. The flexibility in fiscal year selection allows businesses to align reporting with seasonal trends or industry cycles.

Understanding the fiscal year is essential for interpreting financial data accurately. When comparing company performance, investors and analysts must ensure that the periods align to avoid misinterpretation. It also aids in tracking policy changes, budget allocations, and economic performance within a defined financial period.

In summary, the fiscal year serves as a standardized accounting framework that ensures consistency, regulatory compliance, and clarity in financial reporting across public and private sectors.