DEPRECIATION

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chandra sekhar (Querist)
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17 March 2010 PLEASE CLARIFY WHAT IS THE DIFFERENCE BETWEEN INCOME TAX ACT AND COMPANIES ACT CALCULATION IN DEPRECIATION

REGARDS
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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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17 March 2010 Companies act depreciation book depreciation and it is providing minimum depreciation rates

Income tax depreciation for calculating book profit for the purpose of income tax calculation and rates specified maximum allowable depreciation

sivadas chettoor

sivadas chettoor (Expert)
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18 March 2010 Income tax act contains separate provisions regarding the rates of depreciation in AppendixA of the IT rules. Under the companies act you can refer Schedule XIV and would find that rates are different. The rates therein are the minimum and you are free to charge a higher rate. You can also use SLM or WDV but not under IT Act.Under IT act you cannot charge higher rate nor can charge lower rate. Even if you charge lower rate ITO has a duty to grant you the correct rate. Please also note that under the Cos act you need not charge depreciation every year but before distribution of dividend you will have to see that arrears of depreciation is also charged.