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Unabsorbed Depreciation Video Lecture | Income Tax for assessment (Inter Level) - Taxation
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FAQs on Unabsorbed Depreciation Video Lecture - Income Tax for assessment (Inter Level) - Taxation
| 1. What is unabsorbed depreciation in taxation? |  |
Ans. Unabsorbed depreciation in taxation refers to the depreciation amount that is not fully utilized in a particular tax year. It occurs when the depreciation expenses exceed the taxable income, resulting in a loss that cannot be fully offset. This unabsorbed depreciation can be carried forward to future years to offset taxable income and reduce tax liability.
| 2. How is unabsorbed depreciation treated for tax purposes? | |
Ans. Unabsorbed depreciation is treated as a business loss and can be carried forward for a certain number of years, usually up to 8 years, to offset future taxable income. It reduces the tax liability of the business in the future when it generates profits. However, the exact treatment may vary depending on the tax laws and regulations of each country.
| 3. Can unabsorbed depreciation be carried backward to offset previous tax liabilities? | |
Ans. In general, unabsorbed depreciation can only be carried forward to offset future taxable income. However, there may be certain provisions in tax laws that allow for carrying back unabsorbed depreciation to offset previous tax liabilities. This provision is usually applicable in specific circumstances, such as during economic downturns or in certain industries.
| 4. Can unabsorbed depreciation be transferred or utilized by another entity? | |
Ans. Unabsorbed depreciation is typically not transferable or usable by another entity. It can only be carried forward by the same business entity that generated it. However, in some cases, such as mergers or acquisitions, the unabsorbed depreciation of one entity may be utilized by another entity, subject to certain conditions and regulations.
| 5. What are the benefits of carrying forward unabsorbed depreciation? | |
Ans. Carrying forward unabsorbed depreciation provides several benefits to businesses. It allows them to reduce their future taxable income and, consequently, their tax liability. This helps in optimizing tax planning and cash flow management for the business. Additionally, it provides a means to recover the tax benefits of depreciation expenses that were not fully utilized in previous years.
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Nov 16, 2024 Last updated |
Video Description: Unabsorbed Depreciation for Taxation 2024 is part of Income Tax for assessment (Inter Level) preparation.
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