Computer softwere come under fixed assest

Computer Software will be shown under the Head "Non Current Assets" >> "Intangible Assets" and Rate of Depreciiation would be 40% as per Compaanies Act, 1956.

As per AS-26, Intangible Asset should be amortised in following manner:-

    ◘ Software - 3 to 5 Year

    ◘ Others    - 10 Year

         We can take more than 10 year if justified.

Intangible Asset will be shown under the head "Non Current Asset".

As per recent amendment in Income Tax Act , 1962 , We have to deduct TDS on purchase of Software  u/s 194J as it is treated as payment for Royalty , So after amendment by Finance Act,2012 we can treat it as revenue expense rather than capitalising it & claiming depreciation.

Software will be shown under the Head "Non Current Assets" with "Intangible Assets" 

BEFORE THE INTRODUCTION OF Finance Act,2012 computer software purchased (either as package software or customised ) was to be treated as asset and was liable to depriciation u/s 32 of income Tax Act,1961 @ 40%.

But after the date FA,2012 was made applicable ,now payment for purchase of computer software will be classiferd as revenue expenditure u/s37(1) and hence liable for Deduction of TDS (if applicable). This change has come due to change in defination of Royalty u/s 9 of Income tax act, where in some explanations were added.Hence, it is no more a capital asset.