DEPRECIATION
This query is : Resolved
17 March 2010
PLEASE CLARIFY WHAT IS THE DIFFERENCE BETWEEN INCOME TAX ACT AND COMPANIES ACT CALCULATION IN DEPRECIATION
REGARDS
GCS
REGARDS
GCS
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
Income tax depreciation for calculating book profit for the purpose of income tax calculation and rates specified maximum allowable depreciation
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.
18 March 2010
May be read as Appendix-1 (refer rule 5 of IT Rules,1962)
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