Depreciation Claim Restricted to 40% for Companies u/s 115BA(4): CBDT

CBDT Amends IT Rules; restricts depreciation claim at 40% by Newly set-up domestic companies opting for 25% corporate tax

CBDT notifies Income-tax (29th Amendment) Rules, 2016 to amend Rules by inserting proviso to Rule 5(1) to restrict depreciation claim at 40% u/s 32(1)(ii) in the case of Newly set-up domestic companies opting for 25% corporate tax u/s 115BA(4), as under:

CBDT Notification No. 103/2016 dt. 7 Nov. 2016 F.No.370142/29/2016 -TPL

S.O. 3399(E).—In exercise of the powers conferred by section 32, section 115BA and section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes, hereby, makes the following rules further to amend the Income-tax Rules, 1962, namely:-

(1) These rules may be called the Income-tax (29th Amendment) Rules, 2016.

(2) In the Income-tax Rules, 1962 (here after referred to as the principal rules),-

(a) in rule 5, after sub-rule (1), the following proviso shall be inserted with effect from 1st day of April, 2016, namely:-

“Provided that in case of a domestic company which has exercised option under sub-section (4) of section 115BA, the allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets entitled to more than forty per cent. shall be restricted to forty per cent. on the written down value of such block of assets.”

(b) 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.

Note : The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide notification number S.O. 969 (E), dated the 26th March, 1962 and last amended by the Income-tax (28th Amendment) Rules, 2016, vide notification number G.S.R No.982(E),dated the 17.10.2016.

 CBDT Notification No. 103/2016 dt. 7 Nov. 2016

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