Treatment of loss on sale of car ( income tax)

I consider all figures as for Income Tax purpose.

you had 1 car in Block of CARs with opening WDV of Rs. 290000

Less Sale Consideration of Rs. 222000

Add Cost of New car Rs. 900000

WDV after all above is Rs. 968000

Less Depreciation on 968000 will be as under which will be Rs. 77700

on Rs. 900000 for 7.5 % i.e. half year only

on balance 68000/- for 15 % full year

you will get WDV as on 31.03.2012 as 890300

Since the Income Tax follows block concept, there will be no question of accotuning for loss on sale of car.

I hope you are not accounting for a company as the rates as per companies act are different and accounting treatment would be different

Above treatment is for non corporates.

Originally posted by : Subhas Sinha
	Sir, I am  Advocate. I have sold motor car on 20th March,2012  for Rs. 2,22,000/-.WDV value as on 01.04.2011 - Rs. 2,90,000/-. During the same year I have purchased new motor car for Rs. 9,00,000/- on 22nd March,2012. Both are using for professional purpose. Plz tell me the accounting entry as per Income tax Act in Tally Package. Can I claim the Loss on sale of car as a professional expenditure as per Income tax act in profit & Loss Account. Also tell me the  tax effect in computation as per Income tax Act. Its urgent..............

Income tax act follows the concept of block of assets, in your case the following will be the treatment of block

Opening WDV of block                                                                2,90,000

Add: Additions in block                                                                9,00,000

                                                                                                       11,90,000

Less: Assets sold                                                                        2,22,000

Balance eligible for Dep                                                              9,68,000

Less: Depreciation @ 15% on 9,00,000    67,500

           (restricted to 50%)

           Dep on 68,000 @ 15%                        10,200                    77,700

Closing WDV                                                                                  8,90,300

In tally entries will be done as per your own accounting policies followed by you in preparation of accounts, if you are maintaing individual assets seperately than you can recognise loss but that will be added back to your income while computing income taxable under the act