Depreciation on Vehicle GST effect

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Sir/Madam

We purchased a vehicle and claimed ITC on this hence while calculating depreciation GST portion is excluded for income tax purpose

As per companies Act while calculating depreciation

Can I include gst portion to vehicle or exclude

Please advise
Replies (3)
Quick Summary
This discussion explores whether the GST portion of a vehicle purchase should be included when calculating depreciation for income tax and Companies Act purposes, especially after claiming Input Tax Credit (ITC). The consensus suggests that if ITC has been claimed, GST should be excluded from the asset's capitalised cost and therefore from depreciation calculations, aligning with accounting standards like IND AS 16.

When you are Capitalising an Asset in the books of accounts, you are not including GST in the Cost of an asset , for example when purchase Asset you will pass following entry.

Vehicle A/c Dr
Input CGST A/c Dr
Input SGST A/c Dr
To Trade Creditors A/c Cr
( purchase of an Asset)

So Asset will be under Non Current Asset , and Input GST will be under Current Asset , So in this case you are going to Calculate Depreciation only on Cost of an asset excluding GST .

( As per IND16 we include only taxes that are non refundable in the Cost of an asset while Capitalising it)

Take more Opinion on this.
Yes I agreed with Mr Prasad.

@ Mr Kishore,

You claimed ITC then You can't include the GST in asset.
So, depreciation provide only the addressable value of asset.

I guess GST will not be included in depreciation. My ACCA P6 sir told me this.

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