Tax outgo reduction due to new rates of depreciation

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Dear All

 

I'd like to understand logic behind increasing depreciation rates in new Companies Act - why do so especially when it'd mean (significant) reduction in tax outgo for majority of companies (barring Power Gen etc)

Also enlighten about concequence for a small Mom-Pop Pvt Ltd company earlier say paying Rs 1 lakh as tax , so now it will pay say 20% less - 80k tax , so what implications vis a vis scrutiny assessment etc.....

Cheers

Shruti Arora

Replies (1)

Dear Friend,

Change in companies act depreciation rates does not mean reducion in tax payment. For income tax , rates prescribed as per income tax will apply. The only inplication will be for companies who will be paying MAT. For such companies the book porift will be reduced due to higher depreciation and hence there will be tax benefit.

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