About Depriciation

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A car owner is asking if they can claim depreciation on the total cost of a new car, including insurance and registration fees. Their accountant advised against including the insurance cost. The consensus is that while yearly insurance premiums are not capitalised, the initial insurance payment, being compulsory for car use, should be included in the car's total value for depreciation purposes, along with registration fees.

Jyoti

Jyoti (Querist)

20 March 2021 I bought a new car , I pay all charges of new car to showroom owner for example = car value (600000)+ insurance (25000) + Registration fees extra( 45000) , can I claim depriciation on whole amount 670000 in my books ; my accountant says I don't claim insurance value
( 25000)for depriciation, pls suggest me ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 March 2021 Insurance is payable yearly so it can't be capitalised.
Only one time payment can be capitalised.

Jyoti

Jyoti (Querist)

20 March 2021 Means Ist time paid insurance is counted in car total value and I can get depriciation on this value ?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

20 March 2021 Insurance premium is compulsory to use the car and hence the first time payment should be capitalised and hence depreciation can be claimed on the whole amount viz., Rs. 6,70,000.

Jyoti

Jyoti (Querist)

20 March 2021 Thankyou very much sir

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 March 2021 You are welcome...........

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