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
Menu
Tax treatment of Depreciation of ROU assets and lease liability financial expenses
Replies (2)
Quick Summary
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
Recent Topics :
- CAPITAL GAIN REG
- Built a simple tool to automate client document fo
- Capital Gain on Sale of SRA Allotted Flat Received
- Discrepancy in Auto populated figures in GSTR1 of
- What should I do after receiving a GST Show Cause
- Discuss and Download CA Inter Question Paper Septe
- Hi experts needed some help
- Gift of Immovable Property u/s 92 of Income Tax Ac
- NSE BSE Pre-open session changes from 7 September
- Financial statements for non corporate entities
Related Topics :
CAclubindia
