Depreciation rate

Others 763 views 6 replies

Can anybody tell me on which basis we can consider certain % on fixed assets for depreciation

Replies (6)

it is based on the schedule IV  of companies act 

FOR INCOME TAX PURPOSES RATES R GIVEN IN ACT

it depends on somany reasons. for income tax purpose rates r mentioned in d act itself. generally company considers such rates only. such rate depends on someother factors such rate, usage. life period of asset. salvage value etc

Thanks Mounika, A.S and Ayush

I differ with above. The depreciation under the Companies Act are under schedule XIV of the Companies Act 1956, which are the minimum rates. The Company can chose to have more than schedule XIV rates basis useful life assessed by the management. Under income tax, rates are different and it is mandatory to follow those rate. The difference in income tax rate and companies act rates gives rise to deferred tax and the same is accounted as per AS 22.

A company has to provide depreciation as per schedule VI of companies act.It can provide more than specified in sch-Vi but not less..

but when it comes to prep of IT returns and computation u need to calculate the depreciation rates as per IT act just for computation purpose but u should not follow the IT depreciation rates in the books of a/c's

But in the case of some assets the IT depreciation rates are higher than sch-VI rates in that case both the conditions are satisfied.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register