Simple Intro About the Depreciation
The concept of depreciation is used for the purpose of writing off the cost of an asset over its useful life. Depreciation is a mandatory deduction in the profit and loss statements of an entity using depreciable assets and the Act allows deduction either using the Straight-Line method or Written Down Value (WDV) method.
The calculation for depreciation under the WDV method is widely used. However, in case the undertaking is engaged in power generation or its generation and distribution, there is an option to choose the straight-line method.
Requirements For Claiming Depreciation
- The assets must be owned, wholly or partly, by the assessee.
- The assets must be in use for the business or profession of the taxpayer. If the assets are not used exclusively for the business, but for other purposes as well, depreciation allowable would be proportionate to the use of business purposes. The Income Tax Officer also has the right to determine the proportionate part of the depreciation under Section 38 of the Act.
- Co-owners can claim depreciation to the extent of the value of the assets owned by each co-owner.
- You cannot claim depreciation on Goodwill and cost of land.
- Depreciation is mandatory from A.Y. 2002-03 and shall be allowed or deemed to have been allowed as a deduction irrespective of a claim made by a taxpayer in the profit & loss account. That is, the taxpayer can carry forward the WDV after reducing the depreciation amount.
- If opted for a presumptive taxation scheme, the deemed profit is said to have considered the effect of depreciation.
- Depreciation under the Companies Act, of 1956 is different from that of the Income Tax Act. Therefore, depreciation rates prescribed under the Income Tax Act are only allowed irrespective of the depreciation rates charged in the books of accounts.
Benefits of Using Gen Income Tax Software
Gen I-T Software is an excellent solution for calculating Income Tax, Advance Tax, Self Assessment Tax, and Interest under sections 234B, 234A, and 234C. With Gen ITR e-filing software, you can quickly prepare and file income tax returns with accuracy and It has the option of e-filing directly from the software.
There are all the industry-compulsory features available in the software for filing income tax returns, including the automatic selection of return forms, the XML or JSON generation of tax forms, the import of master data and income details, calculation of arrear relief and e-payment of challans with verification. Taxpayers and clients can find many other useful features included in the ITD (Income Tax Department) web services, including MAT/AMT calculation, income deductions summarization, and quick ITR uploading.
Steps to Make Depreciation Chart via Gen Income Tax Software
Step 1:- First Install Gen Income Tax Return Filing Software on your laptop and PC. After that click on Income Tax and then click on the Computation tab.
Step 2:- Select the Client of which you want to view the Depreciation Chart.
Step 3:- Click on Depreciation Chart to view the Depreciation Chart of the year.
Step 4:- After entering the details of Assets you can view the Depreciation Chart as per the Companies Act by clicking on Fixed Asset Schedule (FA) and as per IT by Clicking on the tab Depreciation Chart (IT).