Depreciation

under which act ? companies Act or Income Tax.Be specific

Check whether business is of running on hire basis or not.

Under Income Tax Act

NON HIRE BASIS:

If used for >=180 days, 15%

If used for < 180 days, 7.5%

HIRE BASIS:

If used for >=180 days, 30%

If used for < 180 days, 15%

Under Companies Act,

Also check which method is to be followed, SLM or WDV

NON HIRE BASIS:

SLM  - 11.88%

WDV - 31.23%

HIRE BASIS:

SLM - 15.83%

WDV - 39.3%

calculate your own by using this formula:

1-POWER(RV/WDV),1/USEFUL LIFE.

EXAMPLE:

Motor buses, motor lorries, motor cars and motor taxies other than those used in a business of running them on- USEFUL LIFE- 8 YEARS.

WE CALCULATE THE RATE BY TAKING RESIDUAL VALUE 1% OF COST

FOR A NEW ASSETS WE SHOULD USE (RV/COST)

SUPPOSE COST OF ASSETS IS RS. 100

USEFUL LIFE 8 YEARS

STEP 1:- CALCULATE RV/ COST =1/100= 0.01

STEP 2:- PUT THE VALUES IN A EXCEL SHEET AS MENTIONED AT TOP

1-POWER(0.01,1/8) =43.77%

THIS FORMULA SHOULD BE USED WHEN FIRM IS FOLLOWING WDV METHOD.

FOR SLM METHOD:

BY TAKING COST AS RS.100 AND RV 1% OF COST

DIVIDE: 100-1 =99/USEFUL LIFE*100

                       99/8*100=12.38%.

FOR CAR RUNNING ON HIRE CHANGE ONLY THE USEFUL LIFE IN THE ABOVE FORMULA.

YOU CAN TAKE RV OTHER THAN 1% IN THAT CASE MAKE NECESSARY CHANGES IN THE ABOVE FORMULA.

HOPE IT HELP YOU.

THANKS

RAJIV