Depreciation As Per Income Tax Act

Practical Income Tax
Corporate Income Tax

Either Full Depreciation or Half Depreciation

If asset is put to use for 180 days or more in the year of purchase, then full depreciation

Otherwise half depreciation

If asset purchased and used on last day of the year,still half depreciation

Note:-

Date of Put to Use is important not Date of Purchase

Cut off Date is 3 October

If asset purchased and put to use till 3 October,then full depreciation as number of days till 31 March will be 180 or more

If asset put to use after this date,number of days will be less than 180

Check

 Month No of days From 4th  October 28 November 30 December 31 January 31 February 28 March 31 Total 179

Note:- In 2019-20 Financial Year,since 2020 is a leap year,there is one day extra in Feb,hence cutoff date is 4 October

Check

 Month No of days From 5th  October 27 November 30 December 31 January 31 February 29 March 31 Total 179

Q1

Furniture Purchased for 500000 on 20 Sept,2014.It was put to use same day

Calculate Dep for 2014-15

Dep on Furniture is 10 %

Answer

No of days from 20 sept to 31 March is more than 180

Hence full depreciation at 10%

Dep on Furniture

=500000*10%

=50000

Q2

Furniture Purchased for 500000 on 20 Sept,2014.It was put to use on 15 Feb 2015

Calculate Dep for 2014-15

Dep on Furniture is 10%

Answer

No of days from 15 Feb to 31 March is less than 180

Hence half depreciation

=500000*10%*1/2

=25000

Date of Put to Use is Important,Not Date of Purchase

Q3

Calculate Dep for FY 2015-16 on Furniture in Q2

Answer

 Opening WDV 475000 500000-25000 Less Dep @10% 47500 Closing WDV 427500

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Made by

CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 13 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.