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Questions regarding Depreciation as per Income Tax

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Mr. AB

Self-employed

76 Points Posted on 17 January 2022

On the Income Tax website, I see various rates of depreciation (for income-tax).
I also see a section "Depreciation under Companies Act, 2013" where it talks about "useful life" and scrap-value of assets.
1. I'm a self-employed, not a company. So while accounting for ITR filing purposes, should I account for useful lives of assets? or should I keep mentioning the WDV in ITR depreciation schedules each year as along as assets are practically useful in the business?

2. Should I really have to take "scrap-value" into account while doing the calculations?

3. As per income tax, if we can classify a software that is not an integral part of the computer (ie., application software) as intangible assets, then why the page does not mention "software" under intangible assets?

Ref. link:
https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia.gov.in/charts%20%20tables/depreciation%20rates.htm&k=&IsDlg=0

Replies (2)

Quick Summary

This discussion clarifies depreciation rules for self-employed individuals filing their Income Tax Return (ITR). It addresses whether to consider the 'useful life' of assets as per the Companies Act or continue claiming depreciation based on practical use and Written Down Value (WDV) for tax purposes. The query also seeks clarification on the necessity of accounting for scrap value in depreciation calculations and why 'software' isn't explicitly listed under intangible assets on the Income Tax website, despite being classifiable as such.

sabyasachi mukherjee

Profession

19978 Points Posted on 17 January 2022

1. No useful life to be considered but these are considered in accounting policies of the govt.They form an integral part of audit report.
2. Yes scrap value has to be ascertained.
3. In software you have to create in master.

Mr. AB

Self-employed

76 Points Posted on 17 January 2022

Originally posted by : sabyasachi mukherjee
	1. No useful life to be considered but these are considered in accounting policies of the govt.They form an integral part of audit report.2. Yes scrap value has to be ascertained. 3. In software you have to create in master.