Statutory Accounting & Tax Audit Compliance
Depreciation Calculator (Companies Act vs Income Tax Act)
Simultaneously calculate asset depreciation under Schedule II of the Companies Act, 2013 (useful life basis) and Section 32 of the Income Tax Act, 1961 (block of assets WDV), including 180-day half-rate rules, 20% additional depreciation, and Deferred Tax Asset/Liability (DTA/DTL) timing differences.
1. Asset Cost & Companies Act 2013 (Schedule II)
Configure original purchase cost, useful life, residual value, and accounting method
Invoice cost plus installation, transportation, and commissioning charges
Technical useful life under Schedule II (e.g. 15 yrs for machinery, 3 yrs for PCs)
Statutory floor is 5% under Schedule II Part C
Number of operational days for pro-rata Companies Act depreciation (1–365)
2. Income Tax Act 1961 (Section 32) & Tax Audit
Configure 180-day put to use rule, additional depreciation, and corporate tax rate
Sale proceeds or scrap value realized on disposal during the financial year
Corporate rate (25.17% for Sec 115BAA, 31.2% for LLPs / partnership firms)
Income Tax Act Tax Depreciation (Year 1)
- Companies Act Book Depreciation (Year 1)
- ₹9,05,000.00
- Companies Act Rate & Method
- 18.10% (WDV)
- Book Closing WDV (Year 1)
- ₹40,95,000.00
- Tax Closing WDV (Year 1)
- ₹32,50,000.00
- Timing Difference (Tax Dep − Book Dep)
- ₹8,45,000.00
Deferred Tax Position (AS 22 / Ind AS 12)
Deferred Tax Liability (DTL)Multi-Year Comparative Schedule (Companies Act vs Income Tax Act)
Year-by-year Book WDV vs Tax WDV and reversible timing difference
Frequently asked questions
Why are Companies Act depreciation and Income Tax depreciation different?
The Companies Act, 2013 reflects true and fair accounting presentation based on an individual asset's economic useful life (Schedule II Part C) to report realistic operational profits to shareholders. In contrast, the Income Tax Act, 1961 uses a collective 'Block of Assets' concept with fixed statutory percentage slabs (5%, 10%, 15%, 30%, 40%) designed to govern taxable income and incentivize capital investment.
What is the 180-day 'Put to Use' rule under Section 32?
Under the second proviso to Section 32(1) of the Income Tax Act, if an asset is acquired and put to commercial use for less than 180 days in that financial year (i.e. on or after October 3rd / 4th), depreciation (both normal and additional) is restricted to 50% of the standard rate. The unabsorbed 50% of additional depreciation is eligible for deduction in the immediately succeeding financial year.
Who is eligible for 20% Additional Depreciation under Section 32(1)(iia)?
Additional depreciation of 20% of the actual cost of new plant and machinery is available to assessees engaged in the manufacture or production of any article or thing, or in the generation, transmission, or distribution of power. It is not available for office appliances, road transport vehicles, second-hand machinery, or companies opting for the Section 115BAA concessional 22% corporate tax regime.
What is the residual value requirement under Schedule II of Companies Act, 2013?
Schedule II specifies that the residual value of an asset shall ordinarily not be more than 5% of the original cost of the asset. If a company adopts a residual value higher than 5%, it must justify the basis with technical appraisal and disclose it in the financial statements.
How does the timing difference create a Deferred Tax Asset (DTA) or Liability (DTL)?
Under AS 22 and Ind AS 12, the variance between accounting depreciation and tax depreciation is a reversible timing difference. When tax depreciation exceeds book depreciation in early years, taxable profit is lower than book profit, requiring creation of a Deferred Tax Liability (DTL). As tax depreciation falls below book depreciation in later years, this DTL gradually reverses.
What are the common Income Tax block rates for fixed assets?
Standard rates under Rule 5 of the Income Tax Rules: Factory Buildings (10%), Residential Buildings (5%), Furniture & Fixtures (10%), General Plant & Machinery (15%), Commercial Motor Vehicles on hire (30%), General Motor Cars (15%), Computers & Laptops including software (40%), and Intangible Assets like software/patents (25%).