What are Terminal Depreciation and Balancing Charges under income tax act?

Start networking and exchanging professional insights

Next Question:
Which one of the below is true for Corporate Income Tax or Income Tax on compani...
Posted by:
Muhammad
03-September-2014

MBA Finance Accounting Cost Accounting Financial Analysis Income Tax

Question added by Mohammad Ali , Accounts Officer ( Contract) , Bharat Pumps & Compressors Ltd Naini Allahabad
Date Posted: 2014/10/27

Upvote (1) Views (10) Followers (2) Answers (2) Report Question

Write an Answer
Register now or log in to answer.

2 Answers

by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Terminal Depreciation:

Where an asset on which depreciation has been claimed u/s 32 (1) (i) which is sold destroyed or discarded and if the Sales consideration is less that Actual cost less depreciation allowed then the difference between two factors shall be allowed as Terminal Depreciation in the previous year in which it is sold destroyed or discarded.

Balancing charges:

Where an asset on which depreciation has been claimed u/s 32 (1) (i) which is sold destroyed or discarded and if the Sales consideration is less that Actual cost less depreciation,

Then the least of the following will be treated as income from PGBP as balancing charge.

1. cost less written down value 2.Sales consideration less written down value.

Upvote (3)

Downvote Reply () Report