Depreciation

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Querist : Anonymous

Querist : Anonymous (Querist)

16 April 2013 Can anyone tell me how depreciation saves Tax??

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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16 April 2013 Depreciation amount eligible for claiming of expenditure deduction from the income earned on such asset. Thus due to the depreciation your actual net profit will decrease by the depreciation amount thus your total income also decreases by the depreciation amount than actual earned income. So tax liability shall be computed on total income amount. So when the depreciation decreases the total income our tax liability also decreases thus depreciation saves the tax.

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Ravi Jhamb

Ravi Jhamb (Expert)
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16 April 2013 No Depreciation is not eligible to save tax for individual. It is useful to reduce our income by presenting our expenditure in one time payment.

Querist : Anonymous

Querist : Anonymous (Querist)

16 April 2013 can u please elaborate it little bit..

Ravi Jhamb

Ravi Jhamb (Expert)
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16 April 2013 for purchasing assets u will pay 1 crore rupees. income tax department and company act said u made expense for payment of machine. you can avail expenses of machine in installment. company act divided life of machine and income tax describe rate of depreciation.

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