Asset Depreciation - MCA India

The Asset register is a great addition, but unfortunately most Indian companies cannot use that. Companies need to follow the Ministry of Company Affairs guidelines and the link is included.

Companies can choose two options - WDV and SLM and there are different percentages for each.

After they have to calculate the depreciation based on the number of days from installation and the depreciation percentage. So for an asset Category, say CatA the Depreciation Rate is 6.33%. Some companies will choose to make the depreciation entries every month on a specific day. Some will choose to do it on the last day of the year, but it does not matter, because the amount you can offset is the same.

Any chance of implementing these changes so that Indian companies can take advantage of this great new module and feature?



@JayRam would be happy to fix it :slight_smile:

Can you point out specific fixes that will allow it to satisfy the guidelines?

CC @Pawan

Fix#1: 1.1: Include Percentage depreciation, 1.2: Frequency of making depreciation entries: Once a year (Last Day of Year - X Days, where X can be chosen via another field; X could be 0 as well), 6 Months (Last Day of Half Year - X days, where is X can be chosen via another field; X could be 0 as well), 3 Months, or Monthly. X required on the quarterly and Monthly options as well. While X is used for passing the entries, the period is always taken as the calendar Month, Quarter, Half Year or Year; 1.3: Date of Asset Deployment (as against date of asset purchase); 1.4: Residual Value of Asset: As a percentage of Purchase Value

On that day: System makes entries into the Accumulated Depreciation for the Period according to the formula:

Accumulated Depreciation for the Year + {Purchase Value of Asset * Depreciation Percentage * (Lower value of .Number of Days since asset deployment. .OR. .Number of days since first Day of Depreciation Period.)/100/365}

Residual Value of Asset = Higher of {.(Purchase Value of Asset - Total Depreciation for the Asset). .OR. .(100 - Residual Value %). of asset.

I’m sure there are a few loose ends and I am happy to tie it up.




Most of what you ask is available today although it may not be as direct as a %.

For eg: Frequency 6 Months, 10% depreciation can be equated to “Total Number of Depreciations”, “Expected Value After Useful Life” is Residual Value, which if entered is taken into account for depreciation calculations in “Straight Line Method”

There are some limitations today of depreciation functionality calculation which have been mentioned in GitHub Issue #5766

It would be helpful if you could give some scenario based example with calculation numbers so that we know the exact missing functionality you need.

Chief: I did try to make the system work the way it is designed. The problem is converting the percentage recommended by the MCA to number of depreciations. It doesn’t work perfectly. For instance 6.33% translates to 189.x months of depreciation. So you have to take either 189 or 190 and accountants being sticklers for perfection don’t like either.

Here’s the worksheet that shows the calculations. Hope this helps.




I do agree with you that “Percentage” is the Standard Way of doing things but again even Accountants know that Depreciation Expense is not a real Expense and is an Approximation. Also, most of the depreciation percentages for Building, Plant & Machinery, Furniture groups are rounded percentages and always undergo adjustment during Audits. Accountancy is adjustment :slight_smile:

We could consider adding “Percentage” instead of Total Number of Depreciation (Months) @nabinhait

I work with accountants and over a period of time I have realized that you need to expend a lot of personal equity if you want them to do something different than what they are used to.

Asset Depreciation is not one of the battles that I will pick. They will continue to do these parts manually if you decide that it’s not prudent to implement this.

Every company in India will have the same problem client has got. This approach is required to be compliant with the MCA requirements in India.

We can look to add percentage instead of Number of Months if that is going to keep Accountants Happy

Not sure if anything will make accountants happy at all. The most we can hope for is mildly neutral, I guess.

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