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10% is the rate of depreciation on air condition
Is an energy efficient air conditioner installed in your home tax deductible
Not, depreciation is not deductible for tax purpose. Because it is not wholly exclusively in production
Lost depreciation tax means that loss of that tax amount which could be saved if there would be depreciation expenses in profit and loss account which will reduce the profit and hence the tax as well.
Tax depreciation is the one done based on Tax rules, for example certain asset purchased from sep 2010 to nov 2010 is eligible for 100% depreciation.] Book depreciation is the one based on corporate law . Vehicles depreciated for seven years. The net book value is the one represented in financial statements. Tax man will adjust profits based on tax depreciation rules and revise tax accordingly.
10% is the rate of depreciation on air condition
Is an energy efficient air conditioner installed in your home tax deductible
Not, depreciation is not deductible for tax purpose. Because it is not wholly exclusively in production
Lost depreciation tax means that loss of that tax amount which could be saved if there would be depreciation expenses in profit and loss account which will reduce the profit and hence the tax as well.
Tax depreciation is the one done based on Tax rules, for example certain asset purchased from sep 2010 to nov 2010 is eligible for 100% depreciation.] Book depreciation is the one based on corporate law . Vehicles depreciated for seven years. The net book value is the one represented in financial statements. Tax man will adjust profits based on tax depreciation rules and revise tax accordingly.
The depreciation rate for accounting may be different than that of taxation. The depreciation as per books of accounts may often be termed as book depreciation while that calculated under tax law is termed as tax depreciation.
In accounting, depreciation is an allocation of a previous expenditure, while in economics depreciation represents a decline in current value.
depreciation is a non cash item which have no physical outflow ... when depreciation is applied on tax cash flow it saves tax resulting in decrease in cash outflow
Tax department has developed theire own depreciation schedules for different assets class and use their own depreciations rather than using accounting depreciation and due to this accounting depreciation difference there is also difference in tax we pay and tax we calculate and called "Deffered Taxation"
Deductions that result in a reduction of income tax payments. The tax shield is computed by multiplying the deduction by the tax rate itself. For example, assume an annual depreciation deduction is $3000 and the tax rate is 40%; the tax shield, or tax savings on depreciation is $3000 x .4 = $1200. The company saves $1200 annually in taxes from the depreciation deduction. The higher the deduction, the larger the tax shield. Therefore, an accelerated depreciation method produces higher tax savings than the straight line method.
The depreciation deduction increases the amount of after tax cash (working capital) available to the business. The additional cash is equal to the amount of tax that would otherwise be payable on the depreciation claimed. This is because depreciation is an "unfunded" expense, but is really a tax deferral which is subject to recapture in the future.
Depreciation reduces the amount of profit or increases the overall expenses due to which profit also reduce and that's why less tax to be paid that's is why depreciation is called shield to reduce tax.