Depreciation rate

am working in a private limited company. i would like to know whehter the depreciation rate must take as per companies act 2013 or as per income tax act in the books of accouts. advise and also mention the rates for computers, office equipemnts, interior decorations, furniture and fixtures and softwares.

Replies (2)

a company has to adopt depreciation rate as per companies act,to show in books of accounts.

while computing income under income tax act, rate as per income tax act has to be considered

in companies act,2013, rate is not prescribed. Rather useful lives are stated.

accordingly rate has tobe dereived applying the formula

The chart showing rates derived,assuming scrap is 5%,is attached herewith for your reference.

For depreciating the intangible assets,new companies act says it have to be in line with AS-26

You will make your Balance sheet & P&L accounts as per Companies act.However your tax profit will be different from book profit if IT gives you accelerated depreciation reducing your tax outflow.Companies have to adjust the timing difference of book/tax profit by recognizing deffered tax asset/liability accordingly in their financial books.Similarly a provision for receivables can reduce your book profit but will increase your tax profit....in that case the timing difference will appear as a deferred tax asset assuming when you write off the debt during that year you will be able to get the tax benefit.

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