U/s 32 of Income-tax law the concept of Depreciation has been explained in my PPT

1. TAXATION
DEPRECIATION
INCOME TAX LAW
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Name:- Amit Naresh Ghaywankar

2. What is Depreciation? (u/s 32 of Income Tax act, 1961)
• It is a gradual decrease in value of asset
• It is admissible expense of business
• It is charged out of
1. Profit & Gains of Business
2. Income from other sources
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3. Types of Asset
Tangible asset
Building
Non-Factory Factory Priority
Temporary
structure
Plants Machinery Furniture
Intangible asset
Patents,
copyrights,
License,
Trademarks, etc.
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4. Conditions
• Charge on Capital Assets
• Block of asset
• Owned by the assessee
• Used for business purpose only
• No Deprecation in the year of sale
• Allowed on basis of Written down value of asset
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5. Usage of Asset
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New asset acquired during previous year used
for more than 180 days
Full year depreciation
New asset acquired during previous year and
used for less than 180 days
Half Year depreciation
asset acquired In any other previous year but
put to use in next year
Full Year depreciation
Asset not at all used in the relevant previous
year
No depreciation

6. Block of Asset
Sr. no Rate Asset
1 25% Intangible Asset(Patents, copyrights, License, Trademarks, etc.)
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Intangible Asset
Tangible Asset
Sr. no Rate Asset(Buildings)
1 5% Buildings used for residential purpose
2 10% Non Residential buildings
3 40% • Buildings acquired on/after 1/9/2002 for installation of water
supply/treatment project machines used for business purpose
• Temporary structure like wooden structure
Sr. no Rate Asset(Furniture)
1 10% All Furniture Including electric fittings

7. Sr. no Rate Asset(Plant & machinery) (as per Sec 43(3))
1 15% Plant & Machinery
Motor car, scooter, truck, bus, motor cycle
Air conditioner
Surgical equipment
2 20% Inland vessels & ocean going ships
3 30% Bus, taxi, lorry, used in business of running them on hire
Mould used in rubber and plastic industry
Machines used in semi-conductor industry
4 40% Aircrafts & aero engines
Life saving medical equipment
5 40% Glass & plastic containers used as refills
Textile machinery acquired under technology upgradtion fund scheme during 1/4/2001 to
31/3/2004
6 40% Computers & books( other than annual publication) for professional use
Gas cylinders, furnaces, burner, etc.
Mineral oil concerns
7 40% Energy saving devices
8 40% Pollution control equipment for air, water, etc.
Books in case of library business
Books being annual publication
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8. Computation of depreciation
• Depreciation is calculated on the written down value of asset
• WDV is calculated as
Aggregate of WDV of asset of the same block = 100000
ADD: Actual cost of asset bought/acquired
during previous year = 50000
LESS : Money received on sale of asset of = 20000
same block
WDV of asset = 130000
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9. Additional Depreciation
The conditions for additional depreciation are
• Allowed @ 20% for plant & machinery only
• P&M is acquired & installed on/after 1/4/2005 is applicable
• P&M is acquired before 1/4/2005 & installed later are not applicable
• Charged in addition to normal depreciation
• Plant and/or machinery should be unused
• Does not include office appliances or road transport vehicle
• Condition of usage applicable
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10. 10
Asset Rate Value
Building A 10% 1,00,000
Building B 5% 1,80,000
Plant & Machinery 10% 2,00,000
Motor Car 15% 1,50,000
Good will 25% 1,00,000
Copy Right 25% 3,00,000
Computation Of Depreciation

11. Calculation
• Block 1 (Building)
Building A- 10%= 10000
• Block 2( Building)
Building B- 5%= 9000
• Block 3 (Plant & Machinery) 15%
Plant & Machinery- 22500
Motor car-45000
• Block 4 (Intangible asset) 25%
Good will- 25000
Copy right-75000
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12. THANK YOU
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