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50% Depreciation for Commercial vehicles

CA GUNA (professional) (51 Points)

17 February 2009

50% Depreciation for New Commercial Vehicles purchased after 1.1.2009 and put to use before 1.4.2009 notification no 197 E Dt:19.1.2009

In this situation Vehicels will be used for less than 182 days only, Whether 50% restriction will apply in this case (ie) 50 % of 50% (ie) 25% alowable.

Depreciation 50% or 25% alowable

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4 Replies

CA jayalakshmi (Associate consultant) (235 Points)
Replied 17 February 2009

I think the rate of depreciation will be 50% and not 25%

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 17 February 2009

Recent amendment in New Appendix-I vide Notification No.120/2009 dt.19-01-2009, whereby new entry is added namely (via) in heading III- MACHINARY AND PLANT in item (3) stating that “New Commercial vehicle which is acquired after 01-01-2009 but before 01-04-2009 and is put to use before 01-04-2009 for the purposes of business or profession, Rate of Depreciation is 50%.’ Hence, proviso for user of less than 180 days restricting depreciation @ 50% of normal rate of depreciation will apply. Thus, you are entitled to depreciation @ 25% only (i.e.50% of 50%) for FY 2008-09.

CA.Mkhandelwal (Practice) (156 Points)
Replied 18 February 2009

Originally posted by :CA. ASHOK SHAH

Yes you will be eligible depreciation @ 25% in the current year & @ 50% in the next year on balance 75%.

INCOME-TAX (THIRD AMENDMENT) RULES, 2009 - AMENDMENT IN NEW APPENDIX 1

NOTIFICATION NO. 10/2009, DATED 19-1-2009

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (Third Amendment) Rules, 2009

(2) They shall come into force on the 1st day of April, 2009.

2. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating to TANGIBLE ASSETS, under the heading III. MACHINERY AND PLANT, in item (3), after sub-item (vi) and entries relating thereto, the following shall be inserted, namely:—

“(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table] 50”.

Income Tax – 50% Depreciation for New Motor Vehicles

The CBDT has amended the Table to the New Appendix-I prescribing the Rates at which depreciation is admissible. Now new commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession , will get 50% depreciation.

“Commercial vehicle” means

“heavy goods vehicle”,

“heavy passenger motor vehicle”,

“light motor vehicle”,

“medium goods vehicle” and

“medium passenger motor vehicle”

but does not include

“maxi-cab”,

“motor-cab”,

“tractor ” and “road-roller”.

The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

And the Motor Vehicles Act defines these as,

“heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road - roller the unladen weight of either of which, exceeds 12,000 kilograms;

“heavy passenger motor vehicle” means any public service vehicle or private service vehicle or educational institution bus or omnibus the gross vehicle weight of any of which, or a motor car the unladen weight of which, exceeds 12,000 kilograms;

“light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road - roller the unladen weight of any of which, does not exceed 6,000 kilograms;

“medium goods vehicle” means any goods carriage other than a light motor vehicle or a heavy goods vehicle;

“medium passenger motor vehicle” means any public service vehicle or private service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle;

” maxicab ” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward;

“motorcab” means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driving for hire or reward;

“tractor” means a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road - roller;

And the Act does not define Road-roller.

Any way for you to get a 50 % depreciation, all you have to do is buy that car and drive it before 1 st April 2009.

Recent amendment in New Appendix-I vide Notification No.120/2009 dt.19-01-2009, whereby new entry is added namely (via) in heading III- MACHINARY AND PLANT in item (3) stating that “New Commercial vehicle which is acquired after 01-01-2009 but before 01-04-2009 and is put to use before 01-04-2009 for the purposes of business or profession, Rate of Depreciation is 50%.’ Hence, proviso for user of less than 180 days restricting depreciation @ 50% of normal rate of depreciation will apply. Thus, you are entitled to depreciation @ 25% only (i.e.50% of 50%) for FY 2008-09.