In Income Tax,

Dep is not calculated on basis of Number of Days

Either full Depreciation is calculated or Half Depreciation as shown below

 

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

If asset used for less than 180 days,  half depreciation

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

 

Learn More here

http://www.teachoo.com/214/65/Depreciation-Method/category/Depreciation-Computation-as-per-Income-Tax/

 

Concept of Block of Assets and Depreciation Rates

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)

3. Intangible Assets 25%(Patents/Trademarks/Knowhow/Patent/License)

4, Plant and Machinery (15%,30%,40%,80%,100%),

Plant and Machinery includes

  • Motor Cars on Hire 30%
  • Motor Cars(Others) 15%
  • 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%

 

 

Example 1:-

In 2014-15  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

View Answer

Example 2:-

Continuing previous question, Suppose in 2015-16, 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 blocks of Assets

View Answer

Compute Depreciation in 2015-16

View Answer

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


Example 3 :-

Continuing previous question, Suppose in 2016-17, Car and Machine 1 Sold for 200000 and 350000 respectively 

View Answer

Example 4:-

Resolve Q1 assuming additional depreciation also available

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%


Additional Depreciation available only on Machines and not on other asset

For Machine 1, full Additional Depreciation will be available but for Machine 2, only 10% will be available

View Answer
  1. Accounts and Finance
  2. Step 5 Preparing Projections and Budgets

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.