Provision - Accelerated depreciation

[ASHISH TIWARI]

Income Tax Act, 1961. provides for the rate of depreciation i.e. 80% on Renewable Energy distribution devices.However the Central Electricity Regulatory Commission tariff determination guidilines provides for the different tariff rates i.e. Rs. 18 -in case assessee avails normal depriciation & Rs. 17 in case assessee avails the accelerated depriciation benefits of Income Tax. My querries are 1) whether there is any other provision under the Income Tax Act which deals with accelerated depriciation? 2)In case the rate is 80% only than what is accelerated depriciation.

[DEV KUMAR KOTHARI]

80% depreciation can be called as incentive rate or accellerated rate. This is applicable to all assessees who use prescribed assets for busienss. For power generating and/ or distribution companies there is also another Appendix 1A to IT Rules. It is optional on such companies to adopt rates on WDV as per Appendix 1 or on SLM basis (on cost)as per Appendix 1A to IT Rules. Please refer again section 32 again and Rules 5(1A) and Appendix IA. In case I am missing some aspects, please discuss the same in this forum.

AI Summary

Accelerated depreciation recognized as incentive rate for prescribed renewable energy assets, with IT Rules permitting method choice. An enhanced depreciation rate, commonly 80%, operates as an incentive depreciation rate available to assessees using prescribed renewable energy assets; for power companies the tax rules allow an optional election between Written Down Value rates in the principal appendix or Straight Line Method rates in an alternate appendix, with the Income Tax framework and implementing rules governing the applicable choice and rates.