Depreciation of Fixed Asset as per Income Tax Act on WDV method is not working in ERPNext

ERPNext Accounting
1

While using WDV method in Depreciation in ERPNext, Depreciation is not calculated properly as per Income Tax Act.
As per income tax, if we are entering any Asset which was purchased after 30th Sep i.e, between 1st Oct to 31st Mar, then depreciation should be calculated for the half year, which is not working instead depreciation is calculated for the whole year.

1 Like
2

Yes I also confirm that it shows wrong calculations.

3

There is an update in v 13.13 but still in Income tax act, depreciation for assets purchased before 30th September should be calculated at the full rate of depreciation. And for assets purchased after 30th september it should be 50% rate of depreciation.

E.g. 1 - a laptop (rate of depreciation 40%) purchased on 1st August 2021
Purchase price with GST Rs.1 Lac
1st depreication entry on 31-03-2022 @ 40% = Rs.40,000

E.g. 2 - a laptop (rate of depreciation 40%) purchased on 1st December 2021
Purchase price with GST Rs.1 Lac
1st depreciation entry on 31-03-2022 @ 20% = Rs.20,000

ERPnext calculates depreciation from “available for use date” (in above two cases it calculates depreciation from 1st August and 1st December) which is as per Company act and NOT Income tax act.

Also we do not have GST registration, so any asset we purchase should be depreciated with the asset’s GST cost included. This option is not available in erpnext as of now.

4

Hello can anyone look into this? Especially the calculation of depreciation in the asset purchase year is not done as per Income tax act.

  1. Asset of 1 lac purchased on 31-12-2021 should be depreciated @ 20%, so value of asset as on 31-03-2022 will be 1 lacs - 20,000 = Rs.80,000

  2. ERPnext calculates depreciation based on the no. of days the asset is in use i.e. from 31-12-2021 to 31-03-2022, which is not correct as per the Income Tax Act. It must calculate depreciation @ 20% if asset is purchased after 30-09-2021.

5

Hi,

Is this depreciation calculation as per the Income Tax Act from a standard report or a customised one? Can you please share any details/links you have on it?
I am trying to find a fixed asset register maintained as per the Income Tax Act on erpnext and came across this post.
Any help will be appreciated! Thanks.

6

Hi @devangdesai , @Kruthika ,

Have you got any solution for this?