Dear Sir, i am new member of this group. i want to know the Deprecatation difference between companies act and income tax act.
2- What is w.d.v and s.l.m.method with example. i searched on google but totaly confused .
3- which method we use in properiter firm and a company.
Thanks and Regards
Mohammad Yusuf
Student of MBA.
rates of depreciation are different in companies act and in income tax act.
A company has to apply the rates as per companies act. but for the income tax purpose rates as per IT Act is considered.
W.d.v. method is used in income tax act. As per this method you have to apply the rate of depreciation on the net value of assets i.e. value after providing depreciation for the earlier years.
As per SLM you apply the rate on the purchase value/original value of asset every year.
In a propritorship you can adopt the rates as per income tax act but for a company you have to apply the rates as per companies act
For companies registered under companies act 1956 may apply depreciation under Straight line method/Written down value method as per the rates prescribed in schedule XIV of the companies act 1956.
And at the time of income tax assessment depreciation is applied under WDV as per the rates prescribed under the income tax acr 1961.
Under WDV depreication is charged on net value of assets and under SLM depreciation is charged on the Gross value of fixed assets
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