Indian Income Tax Depreciation Calculation

[Former Member]

Hi

Can any of you please explain/tell me where are the exact SAP configuration settings for the calculation of depreciation calculation as per Indian Income Tax Act by meeting below requirements as per Section 32 of Indian Income Tax Act:

1. If the Asset is being purchased and used in a Financial Year for 180 Days or below 180 Days - Depreciation has to be calculated 50% of Annual Depreciation.

2.If the Asset is being purchased and used in a Financial Year for more than 180 Days - Depreciation has to be calculated 100% of Annual Depreciation.

Waiting for your valuable reply.

Thanks and Regards

P.V.S.R.Gupta

[MarkusBredel · Accepted solution]

Hi,

I have no in depth knowledge to india specific tax requirements. But from your description this sounds to me like the normal "half-year convention" in the capitalizaton year. You can specify the period rule 4 (First year convention at half year start date) in the period control assigned to the depreciation key for "acquisitions". This should fulfill your requirements.

I am sorry, but I do not know if there are already preconfigured depreciation keys delivered by SAP to fulfill that reqiurement. If not I would use my proposal.

Regards,

Markus

[Former Member · Accepted solution]

Hi Markus

Thanks for your reply.

But I understand the solution what you have given does not meet our exact requirment. Because your solution is suitable for a situation when we follow 6 Months or more than 6 Months concept.

I request any of message viewer/s to give exact solution.

Waiting for reply.

Thanks and Regards

P.V.S.R.Gupta

[MarkusBredel · Accepted solution]

Hi,

from your description I understood your requirement that way that the asset itself is used longer or less then 180 days in one fiscal year, not that the fiscal year itself has more or less then 180 days.

If you request exact solutions, maybe you should provide exact requirement descriptions.

Regards,

Markus

[Former Member · Accepted solution]

Hi

I already given the requirement description in the message iteself. I do not have more than that to write.

Thanks

PVSRG

[NathanGenez · Accepted solution]

Have you tried to use Markus's solution? Have you tried period control 4? It would seem like a good solution and since no one else is replying I'm not sure why you are resistant to it.

[Former Member · Accepted solution]

Hi

As you said I tried with a test scenario as below;

1. We are following Financial Year as April to March.

2. Capitalisation Date, Deprn. Start Date and Acquistion Date taken on 03.10.2007.32.

3. Calculated Days are 181 Days from 03.10.2007 to 31.03.2008.

4. After posting acqusition entry on 03.10.2007, I went to Asset Values and it is showing as 6 Months Depreciation only i.e. as 1/2 Year.

5. But as per our requirement it is supposed to calculate full depreciation i.e. 100% of acquistion year depreciation; since asset period is having more than 180 Days.

I think now you can understand my requirement.

Waiting for reply.

[Former Member · Accepted solution]

All above test scenario is done by taking suggested Period Control 04 only.

[Former Member · Accepted solution]

Hi,

Use multilevel method to solve the problem. You can define multilevel method in transaction code AFAMS.

I am not sure which version you are working on. If you are working on ECC 6 then 99.99999999999999% of your problem is solved, if you have copied the chart of depreciation 0IN while creating your chart of depreciation.

IN ECC 6 SAP has provided tax depreciation key from IN1 to IN9. You can use any one of them as per your requirement and link it to asset class for the tax depreciation area.

regards

Thomas

[Former Member · Accepted solution]

Hi Thomas

The reply/solution what you have given is not correct.

[NathanGenez · Accepted solution]

I don't think a ML method will solve this.

Period Control 4 should have the following effect.... If you purchase the asset in periods 1-6, the start date will be set to the beginning of the year which will result in a full year's worth of depreciation. If you purchase the asset in periods 7-12, the start date will be set to the middle of the year which will result in a half year's worth of depreciation. If this is the result that you want than period control 04 should fit it. If it's not working for you then there is something else wrong in your system. My guess is that the period control calendar assignments should be reviewed.

-nathan

[Former Member · Accepted solution]

Hi Nathan

If we want the tax depreciation to be calculated on the basis of 1st 6 Months of the Year and Next 6 Month of the Year; then Period Control Method 04 is ok as you suggested.

But in our case; we are supposed to follow 180 Days concept for Group Asset.

For example: If we take the Asset Value date is 3rd October 2007 which is giving 181 Days in the Financial Year 2007-08 for calculation. As per our requirement 100% Income Tax Depreciation has to be calculated. But if I follow your suggestion of taking Period Control Method 04, it would calculate 1/2 Year Depreciaton only. Then it will not meet our requirement.

I request any of viewers who know exact solution, may guide me.

[NathanGenez · Accepted solution]

But if I follow your suggestion of taking Period Control Method 04, it would calculate 1/2 Year Depreciaton only

No. If the asset is in use for >180 days, then it's acquisition date must therefore occur in periods 1-6 which will set the depreciation start date to the beginning of the year. This will result in a full year's worth of depreciation.

If the asset is in use for <180 days then the start date is set to mid year which results in only 6 months worth of depreciation to be posted.

All of this can be adjusted per your FYV and on a yearly basis if the FYV is year dependent in the asset period control calendar assignments table.

I'll be the first to admit that I don't know the statutory requirements of India but I know how FI-AA works and can't think of an alternative solution for you.

-nathan

[Former Member · Accepted solution]

Hi Nathan

Thank you for your reply. And I would further like to narrate the issue that

1. We are following Group Asset concept for Income Tax Act Depreciation.

2. Group Asset would have number of asset. (It is not like one Group Asset for one Asset).

3. Since it is like '1 to many'; we can not give/change the depreciation start date for every asset/s which are coming/having the same Group Asset.

[Former Member]

Dear Gupta,

I am facing the exactly same issue for calculation of tax depreciation for depreciation area 15 (tax depreciation). Can you please share the solution if you have solved this issue.

Our reponse on this is highly appreciated.

Regards

Kiran Yelamarthy

[sanilbhandari]

Hi

we are facing the same issue. The process suggested allows depreciation calculation based on months and not to the exact date.

Regards

Sanil Bhandari

[Former Member]

Thanks to Nathan for the cooperation extended to us.

[Former Member]

Hi,

I am also having the same problem. I created group asset without any capitalisation date. When I created other individual assets and assigned under this group, system is calculating depreciation from the depreciation date mentioned in the first asset created under the individual assets and not seperately for each asset depreciation dates. COuld you please advise what to do in this issue?

Regards

Uma

[Former Member]

Hi Gupta,

Even I am facing the same issue with Indian Tax Depreciation area. We are implementing ECC6 to our client. I strucked up with this issue for couple of days.

Do you have any idea how we setup Period controls and Multi level methods as per the given percentages for year dependent Fiscal year April- March?

Thanks for the help.

JBC

[Former Member]

Same problem we are facing

In one group assest 3 assest posted on different dates & if we see depreciation calculation then it takes 1st assest acq.date for all assest (at the time of acq.entry it ask for reference date which is ignore by the system)

Any solution?

[Former Member]

Asset Created and not attached any Group Asset in the Tax Depreciation area 02. For Tax Dep created one depreciation key GWDV and assigned to the Tax Dep area as mentioned below.(gwdv dep key givein as01)

I have defined Tax Dep key GWDV with 60% rate of depreciation. Acquired asset in the month of November 2008 i.e. asset put into use in the FY 2008-09 for less than 180 days(then depreciation should calculate at half of the normal rate of dep

But as per Income tax act depreciation has to calculate on group of assets and for that Specified Depreciation areas (i.e. 02 for Dep as per IT Act)

spro/f a/cing/asseta/cing/valuation/group of assets

configure those two steps

after that Created Group asset in AS21

While creating the asset masters, under Depreciation areas tab , for Tax Depreciation , I have attached the Group asset number.

Here depreciation is calculating at Asset group level, but it is calculating for full year even I have acquired one asset in the month of November 2008, which was used for less than 180 days. You can see this depreciation in the group asset explorer

[Former Member]

This message was moderated.