depreciation

[d.v. gupta]

Dear All,

can a pvt co. change the dep method from WDV to SLM.  If  yes then How the diffrerence will be dealt in profit and loss account and in calculation  of MAT.

AI Summary

Private company can switch from WDV to SLM depreciation if justified, with adjustments in financial statements. A private company can change its depreciation method from Written Down Value (WDV) to Straight Line Method (SLM) according to Companies Law, provided the reason is genuine. The change should be reflected in the profit and loss account, with any excess or short depreciation adjusted in the Profit and Loss Appropriation account. There is no impact on Minimum Alternate Tax (MAT) as it is based on book profits. For income tax purposes, only one method, WDV, is allowed. The change should be commercially expedient and not solely for tax avoidance purposes.