Regarding capital gain on sale of fixed asset
This query is : Resolved
22 October 2024
IF WE NOT CHARGED DEPRECIATION ON FIXED ASSETS HENCE, WE CONSIDERED IN 0% BLOCK. IF SAME ASSET HAS BEEN SOLD THEN THERE IS CAPITAL GAIN ON SALE OF FIXED ASSET?
22 October 2024
Yes.
23 October 2024
there is sufficient block of 0% is available to set-off against sale of fixed assets. so thare is no requirement of capital gain?
23 October 2024
It is mandatory to charge depreciation. Even if you have not charged depreciation but for calculation of capital gain, the WDA of the asset will be considered.
23 October 2024
IF THERE IS OTHER ASSETS OF 0% BLOCK IS AVAILABLE AND BLOCK IS NOT NILL YET, SO THERE IS CAPITAL GAIN IS TO BE CHARGED?
23 October 2024
Income Tax Act, 1961:
Section 32 of the Act requires businesses to claim depreciation on assets used for business purposes.
Depreciation is allowed as a deduction from taxable income.
Companies Act, 2013:
Section 123 of the Act mandates companies to provide depreciation on fixed assets.
Accounting Standards (AS) 10 - Accounting for Fixed Assets, and AS 6 - Depreciation Accounting, issued by the Institute of Chartered Accountants of India (ICAI), also require companies to account for depreciation.
Section 32 of the Act requires businesses to claim depreciation on assets used for business purposes.
Depreciation is allowed as a deduction from taxable income.
Companies Act, 2013:
Section 123 of the Act mandates companies to provide depreciation on fixed assets.
Accounting Standards (AS) 10 - Accounting for Fixed Assets, and AS 6 - Depreciation Accounting, issued by the Institute of Chartered Accountants of India (ICAI), also require companies to account for depreciation.
23 October 2024
Depreciation is mandatory for several reasons:
Depreciation matches the cost of an asset with the revenue it generates over its useful life.
Depreciation reflects the reduction in asset value due to wear and tear, obsolescence, or exhaustion.
Mandatory depreciation ensures compliance with accounting standards, which promotes consistency and comparability in financial reporting. Auditors may qualify their reports, indicating non-compliance.
Depreciation affects taxable income, and non-compliance can lead to tax disputes.
Depreciation matches the cost of an asset with the revenue it generates over its useful life.
Depreciation reflects the reduction in asset value due to wear and tear, obsolescence, or exhaustion.
Mandatory depreciation ensures compliance with accounting standards, which promotes consistency and comparability in financial reporting. Auditors may qualify their reports, indicating non-compliance.
Depreciation affects taxable income, and non-compliance can lead to tax disputes.
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