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Depreciation – Rule 5 of Income Tax Rules Revised

The Central Board of Direct Taxes (CBDT), vide Notification No. 103/2016, dated 7th November, 2016 has inserted a new proviso by amending the Rule 5 of Income Tax Rules, 1962 w.e.f. April 1, 2016.

The new proviso, provides that in case of domestic companies exercising the option under section 115BA(4)of the Income-tax Act, 1961 (Act), the depreciation allowance under section 32(1)(ii) of the Act in respect of any block of assets entitled to more than 40%, shall be restricted to 40% on the written down value of such block of assets.

Further, the circular states that “in the New Appendix I, in the Table, in the second column, for the figures “ ‘50’, ‘60’, ‘80’, ‘100’ ”, wherever they occur, the figure “40” shall be substituted with effect from the 1st day of April, 2017”.

Click Here for notification ⇒ notification103_2016