Depreciation Computation as per Income Tax

Income Tax
PGBP Income

Concept of Block of Assets

There is concept of block of assets, all assets of same type treated as one Block and depreciation on them calculated together.

Different Block of Assets and their Rates of Depreciation are

1. Building(5% Residential,10% Commercial,100% Temporary or for Developing Infrastructure)
2. Furniture & Fittings 10%(It includes Electrical Fittings also)
4. Plant and Machinery (15%,30%,40%,80%,100%),

Plant and Machinery includes

• Motor Cars on Hire 30%  (45%, If purchase in between 23rd Aug 2019 to 31st March 2020)
• Motor Cars(Others) 15%  (30%, If purchase in between 23rd Aug 2019 to 31st March 2020)
• Computers 40%
• Books Annual Publications/Library Business 100%
• Books (Others) 60%
• Rollers/Rolling Mills 80%
• Pollution Control Equipment 100%

General Rate on plant and machinery is 15%

New Amendment

Depreciation @ 80% to be charged on

• Windmills and Any other Specialized devices which run on wind mills
• Any special devices including electric generators and pumps running on wind energy

if they are INSTALLED ON OR AFTER 1.4.2018

(If installed before that period,then Depreciation Rate applicable is 15%)

Q1

In 2018-19  Company purchased  the following assets

 Asset Name Purchase Amt Date of Purchase Dep Rate Machine 1 500000 14-Apr 15% Furniture 20000 15-Aug 10% Car 300000 25-Dec 15% Machine 2 40000 26-Jan 15%

How Many Block of Assets

Compute Depreciation in 2018-19

Q2

Continuing previous question,Suppose in 2019-20,Following Assets Were Purchased

 Name of Asset Amount Date of Purchase Depreciation Rate Furniture 75000 20-Apr 10% Computer 50000 15-Nov 40%

Now how many block of Assets

Compute Depreciation in 2020-21

SALE OF ASSETS

In this Case,

If all the assets in a Block Sold

Block Cease to Exist.Hence No Depreciation Charged.Short Term Capital Gain/ Loss Computed

If Some Assets Exist in Block,

Depreciation is Computed on Remaining Value(Opening+Purchase-Sales) if any.NO Capital Gain/Loss is Computed

Q3 Continuing previous question,Suppose in 2019-20,Car and Machine 1 Sold for 200000 and 350000 respectively

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