While softwares in general are depreciated at 25%, as an intangible asset, how should a software with expiry of 3 yrs be depreciated? Can linear method be used where every year one third of the asset is depreciated, or should I depreciate by 25% the first two years and in the year of expiry depreciate the balance?
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Depreciation of software with expiry
Replies (4)
Quick Summary
As per company act you have to take depreciation as per the useful life of the asset as mentioned in the act itself. Again as per Income Tax act you have take depreciation as per the rates specifically mentioned in the act itself.
Ok,I am not a registered company, and I file ITR 3 since I am involved in intraday trading and sell some ad space online. Hence, I believe only income tax act applies to me. However, since the software expires in 3 years, should I continue to depreciate the expense after 3 years, or on the 3rd year, depreciate the balance WDV?
for the purpose of Income Tax > WDV shall be applied @ 25 %
for accounting purpose >> you can use SLM / WDV
Hi Naveen, for Income tax, since on third year the software expires and would no more be usable, can't I depreciate the rest of the WDV?
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