Direct taxes
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 May 2013
can anybody explain the clear relation ship between terminal depreciation , balancing charge & capital gains
CA Sourabh Agarwal
(Expert)
11 May 2013
These terms are used only in case of undertaking engaged in generation or generation and distribution of power. They use SLM basis of depreciation.
Suppose I have a machine having Original Cost as Rs. 100. Current WDV Rs. 75.
Now If asset is Sold for ---
1) Rs. 60, difference (i.e. Rs. 15) is terminal depreciation. [Sec. 32(1)(iii)]
2) Rs. 95, difference (i.e. Rs. 20) is Balancing Charge. [Sec. 41(2)]
3) Any amount over Rs. 100 will be taxable as either LTCG or STCG. [Here Cost of Acquisition would be 100]
Suppose I have a machine having Original Cost as Rs. 100. Current WDV Rs. 75.
Now If asset is Sold for ---
1) Rs. 60, difference (i.e. Rs. 15) is terminal depreciation. [Sec. 32(1)(iii)]
2) Rs. 95, difference (i.e. Rs. 20) is Balancing Charge. [Sec. 41(2)]
3) Any amount over Rs. 100 will be taxable as either LTCG or STCG. [Here Cost of Acquisition would be 100]
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26 June 2013
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