banner_ad

Tax treatment of Depreciation of ROU assets and lease liability financial expenses

1733 views 2 replies
respected sir

I have one query.

My one of the client follow IND AS 116, they created ROU assets and lease liability.
the depreciation of ROU assets charge to P&L account and Finance expenses (interest) on Lease liability also charged to P&L.

How I give tax treatment of that as per income tax act
Replies (2)

As per the Income Tax Act, 1961, the tax treatment for IND AS 116 (Leases) would be as follows: 1. Depreciation on ROU (Right-of-Use) assets: - Allowable as a deduction under Section 32 (Depreciation) - Charge to Profit & Loss (P&L) account 2. Finance expenses (interest) on Lease liability: - Allowable as a deduction under Section 36(1)(iii) (Interest expenses) - Charge to P&L account Additionally, consider the following: - Ensure the depreciation is calculated as per the Income Tax Rules, 1962 ( Rule 5 - Depreciation) - Interest expenses are allowable only if they are related to the business and not capitalized - Keep records of the lease agreement, ROU assets, and lease liability for tax audit purposes

As per the Income Tax Act, 1961, the tax treatment for IND AS 116 (Leases) would be as follows: 1. Depreciation on ROU (Right-of-Use) assets: - Allowable as a deduction under Section 32 (Depreciation) - Charge to Profit & Loss (P&L) account 2. Finance expenses (interest) on Lease liability: - Allowable as a deduction under Section 36(1)(iii) (Interest expenses) - Charge to P&L account Additionally, consider the following: - Ensure the depreciation is calculated as per the Income Tax Rules, 1962 ( Rule 5 - Depreciation) - Interest expenses are allowable only if they are related to the business and not capitalized - Keep records of the lease agreement, ROU assets, and lease liability for tax audit purposes


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 02 May 2026
Senior Executive

hitesh chandwani & co

Pune

B.Com

View Details
Company
Featured 29 April 2026
Manager- Finance and Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured ARTICLESHIP 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details