Rules’ regarding fixed assets and depreciation thereon is different under Companies Act, 2013 and Income Tax Act, 1961.
Under the Companies Act, a Fixed Assets Register has to be maintained, giving the details of the fixed Assets.The minimum rate of depreciation that has to be provided for and the methods are also prescribed under Section 350 and Schedule XIV of the Act. The Company can choose between the Written Down Value and the Straight Line Methods and, can also provide depreciation at a rate which is more than the prescribed minimum rate.
Under the Income Tax Act however, the rates of depreciation are prescribed for ‘Block of Assets’. Block of Asset is defined under Sec 2(11) of the Income Tax Act. Sec 32, Rule 5, Appendix 1 deals with depreciation and rates of depreciation for different Block of Assets. The method of depreciation allowed under this Act is Written Down Value method. The Companies Act prescribes rates of depreciation which are lower than those set by the Income Tax Rules.