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Re depreciation

Khushboo (article assistant) (284 Points)

17 May 2020

in case of LLP, entry to book depreciation in the books should be as per companies act or income tax act ?

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 18 May 2020

I’m not sure about the difference, but I believe, depreciation policy, depreciation method and changes to depreciation policies are prescribed by accounting standards and regulated by companies act.

While tax authorities prescribe the depreciation rates for WDV and SLM method.

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Asha Kanta Sharma (Manager - Finance & Accounts) (36365 Points)
Replied 18 May 2020

There is no need to charge depreciation as per Companies Act. You just need to charge depreciation as per Income Tax.

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 24 July 2020

There is no need to charge depreciation as per Companies Act in LLP s' books of account. You can charge depreciation as per Income Tax to maintain uniformity in books of account.

But, If your LLP is part of any business group, and any company have substantial interest in LLP or LLP have any substantial interest in any company, than it is adviceable to charge depreciation as per company act.

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Shivam RC (Student) (23683 Points)
Replied 25 July 2020

You can follow the Rates provided in the Income Tax Act 1961 inorder to book the Provision of Depreciation. At the end of the day, Income Tax will be levied on the TAXABLE PROFIT ( and not on the Accounting Profit ), so it is better to follow IT Act only. It will be convenient for you Sir ( less calculation and all ).

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