The first weeks of a financial year decide how clean the next twelve months will be. A balance carried forward wrongly in April is found in March, during the audit, and costs far more to correct. This year there is an extra reason to be careful: FY 2026-27 is the first tax year under the Income-tax Act, 2025, while the year just closed is still governed by the 1961 Act.
1. Opening balances
Opening balances should equal the closing balances of FY 2025-26 as finalised, not as they stood in the draft. If the accounts for FY 2025-26 are still being audited, carry the figures forward provisionally, record that they are provisional, and post any audit adjustment as a dated entry in the opening position.
- Agree the opening trial balance to the closing trial balance, line by line.
- Agree each bank, loan, debtor, creditor, and stock balance to an outside document at 31 March 2026.
- Carry forward only the balances that belong in a new year: assets, liabilities, and capital. Income and expense accounts start at nil.
2. Keep the two Acts apart
Income of FY 2025-26 is assessed for assessment year 2026-27 under the Income-tax Act, 1961. Income of FY 2026-27 is for tax year 2026-27 under the 2025 Act. The department’s guidance asks taxpayers to keep a clear dividing line between the two years in income, expenses, TDS, and advance tax, and to mark each challan with the right year.
- Set up payment and challan masters with the year label, so tax paid in April for the old year is not booked against the new one.
- Keep separate working files for the FY 2025-26 return and tax audit, and for the FY 2026-27 computation.
- Carry forward a schedule of losses and unabsorbed depreciation from the last return filed under the 1961 Act.
3. Sub-ledgers and registers
- Fixed assets. Roll the asset register forward: opening cost, accumulated depreciation, and the rates and method that apply this year.
- Inventory. Agree opening stock to the last count and confirm the valuation policy is unchanged.
- Loans. Record the repayment schedule for the year, so interest and principal are not mixed in the books.
- Statutory registers. Open the new year’s pages in the registers a company is required to keep.
4. GST set-up for the new year
The rules require every tax invoice to carry a serial number that is unique for the financial year. Check that the numbering series in the billing system has been reset or continued as intended, and that credit-note and debit-note series are in place. Confirm the tax-rate masters are current, and that any invoices of FY 2025-26 still to be raised are booked in the right period.
5. Withholding masters
Review the list of payees, the nature of each payment, and the rate or threshold applied. Mark the year on every deduction. Statements and certificates for the new year are prepared separately from those of the old year, and the reconciliation to Form 26AS is done year by year.
6. The advance tax calendar
Section 408 of the Income-tax Act, 2025 sets four instalments in a financial year: not less than 15 per cent of the advance tax by 15 June, 45 per cent by 15 September, 75 per cent by 15 December, and the whole by 15 March, each reduced by what was paid earlier. A person who declares profits under the presumptive provisions listed in section 408(2) pays the whole amount by 15 March. Put these dates in the calendar now, with an owner for each.
7. Accounting software and audit trail
A company must keep its books in software that records an audit trail of each change, and the trail cannot be switched off. Electronic books must stay accessible in India, with a daily backup on a server located in India. Check that the feature is on for the new year and that new users and permissions are set as the approval limits require. See the note on books of account.
8. Budget and calendar
Set a budget for the year from the closed accounts of FY 2025-26. List the dates that fall in the year: advance tax, return and audit dates, the annual general meeting, and the dates of any loan covenants. The first month-end close in May is the test of whether the set-up works.
Records to keep ready
- Closing trial balance of FY 2025-26 and the opening trial balance of FY 2026-27, agreed
- Outside confirmations of banks, loans, and major balances at 31 March 2026
- Asset register, stock listing, and loan schedules rolled forward
- Loss and depreciation schedules from the last return under the 1961 Act
- The compliance calendar for FY 2026-27, with owners