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Calculation of unabsorbed depreciation (Income Tax)

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This query is : Resolved


( Author )
03 January 2012

How to calculate unabsorbed depreciation?


Siddhartha Bhardwaj

( Expert )
03 January 2012

Unabsorbed depreciation means when the business profit is not sufficient to cover even depreciation expense.

Eg 1.
Business profit before depreciation Rs. 100 lakhs.
Depreciation Rs. 150 lakhs

In this case Rs. 50 lakhs is unabsorbed depreciation and NOT BUSINESS LOSS.

Eg 2.
Business loss before depreciation Rs. 150 lakhs
Depreciation Rs. 80 lakhs.

In this case, Rs. 150 lakhs is BUSINESS LOSS and Rs. 80 lakhs is UNABSORBED DEPRECIATION.


CA Navin Jain

( Expert )
03 January 2012

Suppose Total Loss is Rs. 100 after claiming of Depreciation of Rs. 20, then business loss will be rs. 80 and ubabsorbed depreciation will be rs. 100.

Further if total loss is rs. 100 after claiming of depreciation of rs. 120 then unabsorbed depreciation will be rs. 100.


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