But to calculate depreciation is very hard and very complex sometimes as we don’t know what should be and how to calculate the depreciation.
Now an excel based depreciation calculator is available here in which you don’t need to calculate the depreciation manually. While using it, there is column of Disposal, in a first column, we have to enter amount of disposal of assets which were sold out of the assets purchased/balanced as on 30 Sep.
Basis of depreciation: - There are some conditions fulfilling only when depreciation is allowed. These conditions are as follows.
Where the assesse is electricity undertaking: - an undertaking engaged in generation or generation and distribution of power is entitled to claim depreciation under any of two following methods.
Written down value
Straight line method.
Where the assesse is any other assesse: - any other assessee can claim depreciation only on written down value method.
Claim of depreciation obligatory: - the assessing officer has to allow depreciation even if it not claimed by the assessee. Claiming of depreciation is now obligatory.
Allow ability of depreciation: - depreciation is allowed to an assessee in case it is established that business either production start or not
Rates of depreciation under Block system
Residential purpose building- 5%
Nonresidential purpose building- 10%
Furniture and fitting including electricity fittings- 10%
Motor Car- 15%
New commercial vehicles- 50%
Ocean going ships- 20%
Patents, copyright, trademark, license, or similar nature intangible assets- 25%
So there is a chart of depreciation rates which is applicable from income tax point of view, there is some difference from the point of view in income tax and company act. But the rates of depreciation remain same. Depreciation is the main expenses for the business as it reduces the value of assets but it is not any cash expense as we need to pay, so calculating depreciation is the must thing for any business.
Download Depreciation calculator from HERE.
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