what is the difference between depreciation in account books
and depreciation as per income tax act
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Answer Posted / yogendra.c
The major Differences are as follows.
1. Method of Depreciation.
In Accounts any depreciation method can be follows as suitable by the company & Accounting Stadard 6. but in case of Income Tax Act, 1961., Specific Method should be followed as prescribed by the Act. For Eg: Electricity Company Should follow Written Down Value (WDV) Method for Calculation of Depreciation.
2. Rates:
In Accounts no rates prescribed, but Section 32 of Income Tax Act, 1961 & Appendix-I to the Income Tax Rules, 1962 specifies the Rates of Taxes to be deducted.
3. Categories:
In Accounts categories is not important due to the own methods of depreciation, but in Income Tax Act, 1961 there are only 4 Categories of Depreciation that is Building, Furniture & Fittings, Machinery & Plant, Intangeble Assets.
4. Computation:
In Accounts Complex computation as No of days of Assets used & other stuffs to be known for calculation depreciation, but in Income Tax, the Computation U/s 32 is very easy.
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