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Computer softwere come under fixed assest

Hiren Prajapati (Dy. Manager Accounts) (27 Points)

20 April 2013

RESPECTED ALL

PLEASE LET ME KNOW ABOUT COMPUTER SOFTWERE FALL IN FIXED ASSETS IF YES WHAT WILL BE PERCENTAGE OF DEPRECIATION.

THANKS

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5 Replies

CA. Akhil Maangal (Head - Finance & Accouunts) (131 Points)
Replied 20 April 2013

Computer Software will be shown under the Head "Non Current Assets" >> "Intangible Assets" and Rate of Depreciiation would be 40% as per Compaanies Act, 1956.

Sanjeev Parasrampuria (B.Com CA Final CS Final) (273 Points)
Replied 20 April 2013

As per AS-26, Intangible Asset should be amortised in following manner:-

◘ Software - 3 to 5 Year

◘ Others - 10 Year

We can take more than 10 year if justified.

Intangible Asset will be shown under the head "Non Current Asset".

CA. Kuldeep Singhi (Entrepreneur) (424 Points)
Replied 20 April 2013

As per recent amendment in Income Tax Act , 1962 , We have to deduct TDS on purchase of Software u/s 194J as it is treated as payment for Royalty , So after amendment by Finance Act,2012 we can treat it as revenue expense rather than capitalising it & claiming depreciation.

Vishal P. Deshmukh (Officer Accounts & Finance) (53 Points)
Replied 20 April 2013

Software will be shown under the Head "Non Current Assets" with "Intangible Assets"

Puneet (Senior Executive -Finance & Accounts) (30 Points)
Replied 21 April 2013

BEFORE THE INTRODUCTION OF Finance Act,2012 computer software purchased (either as package software or customised ) was to be treated as asset and was liable to depriciation u/s 32 of income Tax Act,1961 @ 40%.

But after the date FA,2012 was made applicable ,now payment for purchase of computer software will be classiferd as revenue expenditure u/s37(1) and hence liable for Deduction of TDS (if applicable). This change has come due to change in defination of Royalty u/s 9 of Income tax act, where in some explanations were added.Hence, it is no more a capital asset.