Financial year for central government

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C.A Alok Mukherjee (Querist)
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07 February 2013 In Railway, the financial year is based on March to February, can anybody enlighten me about this background? on what strength they can follow such period?

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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08 February 2013 Financial year for railways is also April to March.

Only Budget is presented in February.

C.A Alok Mukherjee

C.A Alok Mukherjee (Querist)
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08 February 2013 I am sorry, my question is in relation to tds for railway employees.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 The financial year for Indian Railways running from March to February is based on historical reasons and administrative convenience rather than following the typical April to March financial year observed by most other entities in India. Here’s some background on why this period was chosen and how it relates to TDS (Tax Deducted at Source) for railway employees:

### Background of Indian Railways' Financial Year:

1. **British Influence:**
- The railways in India were established during British colonial rule, and the administrative practices, including financial management, were often based on British systems.
- The British fiscal year traditionally ran from March to February, which could have influenced the adoption of this period by Indian Railways.

2. **Operational Considerations:**
- Indian Railways operates on a massive scale with extensive infrastructure and operations spread across the country.
- The financial year from March to February may align better with the operational cycles and budgeting requirements specific to the railway network.

3. **Historical Practice:**
- Over time, Indian Railways has maintained consistency in following the March to February financial year. This continuity helps in long-term planning, budget allocation, and financial reporting.

### TDS for Railway Employees:

Regarding TDS for railway employees, the principles and procedures are governed by the Income Tax Act and related regulations prescribed by the Central Board of Direct Taxes (CBDT). Here’s how TDS typically applies:

- **TDS Deduction:**
- Indian Railways, like other employers, deducts TDS from the salaries of its employees based on their income tax liabilities.
- TDS is deducted at the applicable rates specified under the Income Tax Act, which may vary based on the employee's income slab and exemptions.

- **Financial Year Consideration:**
- The financial year from March to February followed by Indian Railways is recognized for TDS purposes as well.
- Income tax calculations, including TDS deductions, are computed based on the employee's earnings during this period.

### Implementation and Compliance:

- **Form 16:**
- Railway employees receive Form 16 from their employer (Indian Railways) at the end of each financial year.
- Form 16 details the salary paid and TDS deducted during the year, which employees can use while filing their income tax returns.

- **Legal Compliance:**
- Indian Railways ensures compliance with TDS provisions, including timely deduction, deposit, and filing of TDS returns with the Income Tax Department.

### Conclusion:

The financial year from March to February followed by Indian Railways is grounded in historical continuity and operational considerations specific to the railway network. For TDS purposes, this period is recognized under the Income Tax Act, and railway employees receive Form 16 to facilitate their income tax filings. The adoption of this financial year cycle ensures consistency in financial management and compliance with taxation regulations for both the organization and its employees.