23 June 2013
the very basic differwnce is that by giving higher benefit in income tax the GOvt want you to invest more in capital infrastructure to save tax and by this way they want to build a chain of capital investment.
23 June 2013
In Written Down Value (WDV) method depreciation is charged on the reuced price. Example: Asset purchased for Rs. 100.00: Depreciation rate 10%. First year its value will be reduced to 90.00 (100-10% of 100) and in second year depreciation will be Rs. 9.00 i e 10% of 90. Similarly third year it will be Rs. 8.10. This way the value of asset never comes at Zero. In Straight Line Method (SLN) life of a asset is known then for the duration of life ever year an equal sum is taken as depreciation. Example Asset purchased for Rs. 100.00 Life ascertained 8 years and then every year a sum of Rs. 12.50 is charged to Depreciation and after 8th year its book value will be zero. WDV method is strongly recommended.
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