Depreciation

[Pradeep Kaushik]

Dear All,

There are two method for depreciation (SLM and WDV), What is the significance to adopt the method as per Companies Act, while for computation of Tax Liability, we have to take the rates as per income tax act.

Can we adopt both methods (SLM and WDV) at the same time. What is the procedure to determine the useful life of Asset in SLM Method.

Please clarify with example.

Best Regards.

Pradeep Kaushik

 

[CA Rachit Agarwal]

For SLM also, Schedu XIV of the Companies Act has provided the depreciation rates.

We can adopt SLM/WDV under Companies Act and WDV under Income Tax.

Rates of Depreication and Method of charging depreciation differs from industry to industry based on the lifecycle of the assets.

AI Summary

Depreciation method choice: companies may use SLM or WDV for accounts while tax uses WDV rates for computation. Companies may apply either the Straight Line Method (SLM) or the Written Down Value (WDV) method under the Companies Act, with Schedule XIV providing rates and useful-life guidance; for income-tax computation depreciation is calculated under the WDV system using Income-tax Act rates, so accounting and tax methods/rates may legitimately differ and be maintained concurrently for their respective statutory purposes.