Unclaimed depreciation of assets acquired 2 years back for professional work

Hi Amit,

Great question! Here’s how you can handle unclaimed depreciation on assets purchased in earlier years for your professional freelancing work:

1. Can you claim depreciation for previous years which you missed?

• No, depreciation is a time-bound expense and is allowed only for the year in which it is claimed.

• You cannot claim depreciation for earlier years that were not claimed (no carry-forward of unclaimed depreciation for previous years).

• However, if you did not claim depreciation in previous years, you can claim depreciation for the current year on the written down value (WDV) as on 1st April of the current year (after reducing cost of assets by depreciation already claimed, if any).

2. How to handle depreciation claim in the current year on assets bought in previous years:

• Calculate the Written Down Value (WDV) of the asset as on 1st April of the current year:

  • WDV = Cost of asset - depreciation claimed till date (if none claimed, WDV = Cost of asset)

• Then compute depreciation for current year as per the applicable rates under Income Tax Rules (usually block rates for laptops, furniture, mobiles, etc.) on WDV.

• Show this depreciation under “Depreciation” expense in your Profit & Loss and accordingly in the ITR-3 form.

Important notes:

• If you are in the investment phase (no income), depreciation loss can be carried forward and set off against future professional income.

• Maintain proper documentation/invoices of assets purchased.

• Ensure assets are used wholly and exclusively for professional purposes.

Summary:

• No claim for previous years’ unclaimed depreciation.

• Claim depreciation for the current year based on WDV.

• Carry forward depreciation loss if no income to set off.