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India cos want 15-month financial year due to coronavirus

Business Desk | Published: 22:23, Mar 29,2020

 
 

After the Indian government postponed deadlines for filing tax and earning returns, several companies and stakeholders have sought extension of current financial year to a 15-month one, to end in June 2020, reports Economic Times.

As per the proposal the next financial year would start from July this year and would end in March 2020.

According to the people in the know several companies have seen all their ratios—from debt to equity to return on capital—go for a toss in last one month due to Coronavirus and shutdown that followed.

The Indian government in last few days reached out to several industry experts to seek their opinion on impact of such a step, say people with direct knowledge of the matter.

‘For several companies there is a need to extend the financial year to June end as most of their ratios have gone for a toss due to Coronavirus. It’s only fair that companies are given additional time because even when tax deadlines are extended, there is a pressure from revenue department to pay before March end, as that’s the year end for them,’ said said Dinesh Kanabar, CEO, Dhruva Advisors.

Industry experts point out that for all the companies last one month has hugely impacted cash flows and that has resulted in their mark to market. Extension of the financial year may spread the bad period over more months and could help companies recover a bit say experts.

Government recently extended several March end dead lines like filing year end results or tax returns to June. Industry trackers say that the extension of the compliance deadline has provided relief for companies to meet the obligation, but that alone may not be enough.

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