Quick Asset Presets
Governed by Income-tax Act, 1961 & Rules 1962
Schedule II, Part C, Item IV(i)
Cost − Salvage / Useful Life
Appendix I, Part A, Item III(1)
Dual Depreciation & Deferred Tax Determination
General Plant and Machinery (other than continuous process) · Schedule II, Part C, Item IV(i)
Carrying Disparity (Book WDV − Tax WDV): ₹2,22,740 · Effective Corporate Rate: 25.168%
• Tax Depreciation exceeds Book Depreciation, resulting in a Tax Base lower than Book Carrying Amount. This taxable temporary difference generates an estimated Deferred Tax Liability (DTL).
Multi-Year Side-by-Side Amortization Schedule
Annual carrying value divergence & deferred tax balance trajectory (Corporate Tax Rate: 25.168%)
| Yr | FY | Opening Book | Book Depr | Closing Book | Opening Tax | Tax Depr | Closing Tax | Disparity (Diff) | DTA / DTL | Def. Tax Balance |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 2025-26 | ₹25,00,000 | ₹1,52,260 | ₹23,47,740 | ₹25,00,000 | ₹3,75,000 | ₹21,25,000 | ₹2,22,740 | DTL | ₹56,059 |
| 2 | 2026-27 | ₹23,47,740 | ₹1,58,333 | ₹21,89,406 | ₹21,25,000 | ₹3,18,750 | ₹18,06,250 | ₹3,83,156 | DTL | ₹96,433 |
| 3 | 2027-28 | ₹21,89,406 | ₹1,58,333 | ₹20,31,073 | ₹18,06,250 | ₹2,70,938 | ₹15,35,313 | ₹4,95,761 | DTL | ₹1,24,773 |
| 4 | 2028-29 | ₹20,31,073 | ₹1,58,333 | ₹18,72,740 | ₹15,35,313 | ₹2,30,297 | ₹13,05,016 | ₹5,67,724 | DTL | ₹1,42,885 |
| 5 | 2029-30 | ₹18,72,740 | ₹1,58,333 | ₹17,14,406 | ₹13,05,016 | ₹1,95,752 | ₹11,09,263 | ₹6,05,143 | DTL | ₹1,52,302 |
Note: In Year 1, 180-day limitation (50% rate) and Section 32(1)(iia) 10% carry-forward into Year 2 are automatically factored into the schedule.
Illustrative Deferred Tax Journal Entry (Ind AS 12 / AS 22)
Illustrative double-entry accounting presentation (For guidance only — not formal audit advice)
Dr. Profit & Loss A/c (Deferred Tax Expense) ₹56,059
To Deferred Tax Liability (DTL) A/c ₹56,059
(Being recognition of estimated deferred tax liability under Ind AS 12 / AS 22 due to accelerated tax depreciation)Under Ind AS 12, deferred tax is recognized on temporary differences between the carrying amount of an asset in the balance sheet and its tax base. Future reversals dictate DTL or DTA.
Under AS 22, deferred tax is accounted for timing differences between taxable income and accounting income that originate in one period and are capable of reversal in subsequent periods.
Statutory Caveat: Actual balance sheet recognition of Deferred Tax Assets requires management to assess reasonable/virtual certainty of future taxable profit at the time of reversal under Ind AS 12 / AS 22. Current effective rate: 25.168%.
Companies Act, 2013 vs. Income-tax Act: Statutory Comparison Matrix
Fundamental legal, operational, and mathematical differences between Schedule II and Tax Blocks
| Statutory Parameter | Companies Act, 2013 (Schedule II) | Income-tax Act, 1961 / 2025 (Sec 32 / Sec 33) |
|---|---|---|
| Governing Statute | Companies Act, 2013 (Section 123 & Schedule II) | Income-tax Act, 1961 (Sec 32 & Rule 5) & Income-tax Act, 2025 (Sec 33 & Rule 25(1) read with Appendix I) |
| Unit of Computation | Individual Asset & Significant Components (Note 4 Part C) | Block of Assets Pool (1961: Sec 2(11) & Sec 43(6) | 2025: Sec 2(17) & Sec 41(1)(c)) |
| Depreciation Method | Straight Line Method (SLM) or Written Down Value (WDV) | Mandatory WDV on Pool (Sec 32(1) / Sec 33(3)(a); Rule 25(3) read with Appendix II optional SLM for power generation undertakings) |
| Residual Value Ceiling | Ordinarily not more than 5% of original cost | Nil (Terminal depreciation / Section 50 capital gains) |
| Partial Year / Addition Rule | Exact pro-rata days from put-to-use date to year-end | 180-Day Rule: If put to use < 180 days, rate is restricted to 50% (1961: Sec 32(1) 2nd Proviso | 2025: Sec 33(4)) |
| Working Shift Treatment | Extra Shift: +50% (Double), +100% (Triple) on eligible P&M | No extra shift depreciation for tax purposes (pool system) |
| Additional Depreciation | Not recognized under Schedule II / Accounting Standards | 20% on new manufacturing P&M (10% + 10% if < 180 days) under Sec 32(1)(iia) / Sec 33(8)-(9) |
| Concessional Regimes | Not applicable to financial statement depreciation | Sec 115BAA/115BAB: Additional depreciation strictly barred |
| Turnover Reference Year (25% Rate) | Current financial year audited revenue (Schedule III) | Reference Year PY-2 (Two years prior) under Finance Act |
| Marginal Relief vs Deferred Tax | Ind AS 12 / AS 22: Measured using substantively enacted rates | Finance Act: Single-year tax relief if income marginally > ₹1 Cr / ₹10 Cr |
| Transition & Savings Continuity | Continuous carrying amounts under Companies Act accounting framework | Section 536(1)-(2) saves rights; Section 41(1)(b) ensures seamless continuity of 1961 Act WDV into Tax Year 2026-27 |
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