Question

Rate of additional Depreciation will be under section 32- Indian Income Tax Act

• A. 10%
• B. 20%
• C. 15%
• D. 30%

Hint:

'Additional Depreciation' is a special tax break to encourage manufacturing. The standard rate for this incentive under Section 32 is 20% on new plant and machinery.

Answer 1

The Correct Option is B

Section 32(1)(iia) of the Income Tax Act, 1961, provides for an "additional depreciation" as an incentive for new manufacturing undertakings. It allows a further deduction over and above the normal depreciation. The rate of this additional depreciation is 20% of the actual cost of new plant and machinery acquired and installed by an assessee engaged in the business of manufacture or production. There is a condition that if the asset is put to use for less than 180 days in the year of acquisition, only half of the additional depreciation (i.e., 10%) is allowed in that year, with the balance allowed in the subsequent year.