Depreciation rate for llp whether it act or schedule vi

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 October 2018 For preparing financial statements for LLP, whether depreciation under schedule VI is mandatory or depreciation under the income tax act can be followed.

Expert : Anonymous

Expert : Anonymous (Expert)

14 October 2018 As per me Income Tax rate to be followed

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 For Limited Liability Partnerships (LLPs) in India, the requirements for depreciation are primarily governed by the provisions of the Limited Liability Partnership Act, 2008, and the LLP Rules, 2009. Here’s how depreciation is typically handled for LLPs:

1. **Depreciation Rate for LLPs:**
- LLPs are required to follow the depreciation rates and methods prescribed in Schedule II of the Companies Act, 2013. This schedule provides the useful lives and depreciation rates for various categories of assets.

2. **Mandatory Compliance with Schedule II:**
- As per Section 34(5) of the Limited Liability Partnership Act, 2008, LLPs are required to prepare their financial statements in accordance with Schedule II to the Companies Act, 2013. This schedule mandates the method and rates of depreciation that must be applied.

3. **Depreciation as per Income Tax Act:**
- LLPs are primarily governed by the provisions of the LLP Act and the Companies Act, 2013, for financial reporting purposes. While the Income Tax Act, 1961, provides depreciation rates for income tax purposes, these rates may differ from those specified in Schedule II of the Companies Act, 2013.
- However, for financial reporting and preparation of financial statements, LLPs must adhere to the requirements of Schedule II to the Companies Act, 2013. This ensures consistency and compliance with accounting standards.

4. **Choice of Depreciation Method:**
- LLPs typically use the Straight Line Method (SLM) or the Written Down Value (WDV) Method as prescribed in Schedule II for depreciation calculation. The choice of method depends on the useful life estimated for each asset category and the policy adopted by the LLP.

In summary, while the Income Tax Act provides depreciation rates for taxation purposes, LLPs must adhere to Schedule II of the Companies Act, 2013, for preparing their financial statements. This ensures uniformity and compliance with the statutory requirements applicable to LLPs in India.

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