Indian Income Tax Depreciation Calculation

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

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

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Config of Group assets - Tax Depreciation Calculation : India

Dear Seniors,
can you please explain the configuration of the Group assets and how exactly the tax depreciation calculation in India happens for the individual assets with scheme of entries.
Thanks and Regards
Sathish

Hi,
In India, depreciation on assets for the purpose of computation of net income as per the Income Tax (IT) Act 1961 is calculated over a block of assets instead of individual assets as allowed under the Companies Act 1956. Asset acquisitions and retirements are managed over the block level. The IT Act prescribes certain rates of depreciation to be used under the Written down Value (WDV) method over these asset blocks to compute depreciation.
The following are the customization settings that may be followed in the R/3 system in order to manage your assets in the income tax depreciation area.
1. Copy the standard chart of depreciation 0IN as provided by SAP and create your own chart of depreciation.
2. Use the depreciation area 15 for the purpose of management of assets under the IT Act. Make it statistical in nature. (Reference Transaction Code: OADB). Do not check the box negative net book value.
3. Specify that the Income Tax depreciation area takes over the APC from the book but not make it identical (Reference Transaction Code: OABC).
4. Create an asset class for the purpose of income tax blocks. This asset class will be used to create only group assets. (Reference Transaction Code: OAOA)
5. Specify that the depreciation area for income tax can be managed only for group assets. (Reference Transaction Code: OAYM). This would mean that depreciation for this depreciation area would be computed only at group asset level.
6. Specify that the asset class defined in (b) above will be used for creating group assets only. (Reference Transaction Code: OAAX)
7. Two period control methods (IT and NL) have been defined in the system for determination of start or the end of depreciation calculation at the time of a fixed asset acquisition or retirement. You may use these period control methods while creating the depreciation keys for the purpose of IT depreciation.
Calendar assignments have been made for the above mentioned period control methods in order to reflect valuation requirements as per the Income Tax Act (Transaction Code: OAVH). You may create your own period control methods depending on the fiscal year variant you use. The period control methods supplied are based on the fiscal year variant V3.
8. Depreciation Keys: The following depreciation keys have been created in the system. They correspond to the income tax blocks that are prescribed under Indian tax laws. They are as below:
Depreciation Keys:
1. IN1 - Tax Depreciation - 5% -
I Hope it will give you some basic guidance.
Regards,
Krishna Kishore

Income tax depreciation in india

Dear All,
How do we adress the income tax depreciation in India.
As we know the depreciation treatment for Income tax depreciation is a block concept...how do we adress that...
Could any one explain elaborately if possible...short and precise inputs are also most welcome...
Please help to resolve the issue
Sapfrido

Existing group asset concept for income tax depreciation functionality was withdrawn with Note 738919.
Following limitations/restrictions are there in the existing process.
Limitations of Group Assets
Locking
Cap on the volume of transactions u2013 99,999
Limitations of Report J1IQ
Opening Balance Calculation
Depreciation Calculation for Assets acquired and Put to use for less than 180 days
Depreciation Calculation for different fiscal year variants
Assets Acquired and Sold in the same year
Asset Block Retirement by Scrapping
Asset put to use date capture
Report Formatting Issues
The solution for IT Depreciation Calculation is being revamped and the new solution shall be available in EhP5.
If you have further query about new solution better to contact SAP by raising the OSS message by using component -XX-CSC-IN-FI

Tax depreciation - calculation of WDV

Hi
where do we configure the settings for calculating the WDV for income tax depreciation or it is preset in the system
Regards
Ajay

Dear Nagesha,
Please note that J1INQ is NOT in use and this report has been withdrawn by SAP.
Please review the below note in this reference.
738919 - IT Depreciation for Assets, India
The solution for IT Depreciation Calculation is being revamped and the
new solution shall be available in EhP5 SP02.
The general availability of this report will be announced through this
note.
There is no alternative as of now for the same.
Thanks for the understanding and co-operation.
Have a Nice Day,
if you are ok with the above info, then close this ticket.
Manu
Edited by: manucs on Dec 29, 2011 10:12 AM

What is Income Tax Depreciation - India and How it is dealt in SAP?

Dear Experts,
    My Client wants Book Depreciation and Income Tax Depreciation???
    I want to know how the IT Depreciation is dealt in SAP alongwith the necessary Configuration settings....??
    Whether we will be able to show both the Balance sheets : Tax Balance Sheet as well as Companies Act
Regards,
Nimish Agarwal
deleted
Moderator: Upon next violation of SDN rules your user will be blocked

Hi Nimish,
Please follow the link below where I have replied on IT Depreciation and the concept of Group Asset earlier. This will help you.
Re: Concept of Group Asset
Re: Depreciation as per IT Act
Regards,
SAPFICO

Income Tax Depreciation-India

Hi,
You all might be aware To Evaluate the Income Tax Depreciation in Asset Accounting we have got 2 options:-
1.   By Adopting Addittional Depreciation Area (Depreciation Area 15 (Depreciation as per Income Tax
      Act 1961)
      But the problem that I am facing is we have to give 2 Dep Key one for Book Dep & the other for Income Tax Depreciation and I have defaulted the dep keys in Asset Classes but when I am creating the Asset Master the dep key that is inputted for Book Depreciation is automatically copied to I.T Dep Area which is incorrect.
     I have activated the Dep keys.
2.   Secondly we can use Group Assets to derive I.T Depreciation I have done the necessary settings in OAYM but when Iam creating a Asset Master the Group Asset field is disabled I have checked the settings in AO21 and made Group Asset field optional but still that particular field is greyed out.
    We are using ECC 6.0 Version and I have copied COD- 1IN
    I just wanted to know whether SAP has withdrawn support for I.T-Depreciation-India if yes can anybody give me a reference note or country version release so that i can intimate the same to the client.
Regards
Sunil

Dear Ramesh,
   Thnx a lot it has worked and my problem has been solved.
Regards
Sunil

Tax Depreciation Calculation for Malaysia

Hi Guys,
We have a requirement to calculate Tax Depreciation for Malaysia with reference to the Capital Allowance.The scenario is like this:
For Asset Class say Office Equipments Initial Allowance is 20% and Annual Allowance is 10%
That means depreciation will be calculated @20% on the acquisition value immediately upon acquisition for one time. Again depreciation @10% per annum will be calculated on the acquisition value for the entire useful life of the asset from the date of acquisition.
Example: Asset is capitalised at MYR 10,000 on 1.1.2010
First Initial Depreciation would be: 20% on 10000= 2000
Annual Depreciation for 2010 would be : 10% on 10000= 1000 and this will be same for next 8 years.
Depreciation Method is SLM
In this case changeover should happen within the year.
Can you please suggest how to create a depreciation key in SAP for this.
Early respponse would be appreciated.
Regards,
Chandra

Hi Chandra,
Have you found the solution for this scenario?
Thanks

Tax depreciation calculation requirement

Hi
I am working on tax depreciation area for new roll out project. In this requirement we need to give two allowances in the year of purchase (acquisition) of the asset, one is Initial allowance and another one is yearly allowance. Then subsequence years only yearly allowance. In the last year may be on sold or scrapped there is no allowance.
I am very much comfortable till first year of acquisition and subsequence years with change over method. But I am struggling with the last year, because it is not only on the end of useful life, but also for sales and scrapping in between.
Please help me.
Regards
Padma

Please add standard depreciation area "10" Federal Tax ACRS/MACRS. In OADB, the GL posting indicator should be set to "0".
Make sure this depreciation area is in all asset master records.
Then execute any asset report / depreciation simulation reports to get the depreciation per Federal Tax calculation.
Cheers

Tax depreciation calculation - India

Hi,
For calculating Tax depreciation for India, we use group assets in asset master (dep area 15).
SAP standard report J1IQ is obsolete and can not be used.
How to calculate tax depreciation for India.
Requirement for India tax depreciation is :
An asset is put to use < 180 days, depreciation will be 50% of the depreciation rate for that asset (say dep rate is 15%, depreciation will be 7.5% of the asset value.
If asset is put to use > 180 days, depreciation will be 100% of the depreciation rate for that asset (say dep rate is 15%, depreciation will be 15% of the asset value).
J1IQ is obsolete.
Most of the consultants are facing this problem.
What is the solution???????????

Dear Nagesha,
Please note that J1INQ is NOT in use and this report has been withdrawn by SAP.
Please review the below note in this reference.
738919 - IT Depreciation for Assets, India
The solution for IT Depreciation Calculation is being revamped and the
new solution shall be available in EhP5 SP02.
The general availability of this report will be announced through this
note.
There is no alternative as of now for the same.
Thanks for the understanding and co-operation.
Have a Nice Day,
if you are ok with the above info, then close this ticket.
Manu
Edited by: manucs on Dec 29, 2011 10:12 AM

Income Tax not Calculated for one employee.

Hi experts,
we have updated our patch lvl upto 86. Budget Changes Note is applied already. Now the Problem is with one employee.
Out of 1000 employees for one employee /436, /446 and /450 generated correctly with correct figure. But /460 is not generated.
I can see in the log /451 is generated with the amount exactly as /450.
Why system is not generating /460?
Can anyone guide me?
Regards
Nasim

Well the reaults are surprising as cross financial arrear /616 is only 1385.96 and relief generated by this is 18776. Which is simply not possible. Even in FY 2010-2011 relief should not be generated as relief only comes when employee is end up paying more taxes than last year tax on arrears. Now since tax slabs are increased, relief will not be egenrated.
This issue you can check with OSS message.
IF you want to deactivate the Section 89 relief implementation switch S89SW constant as 0 in table V_T511K. It may also activated on employee level, then you need to check IT0588/ subtype 4. Before deactivating it check out the impact after deactivation in case of retro as i may increase/ decrease the past tax.
Please note that implementation level switch supposed to be activated/ deactivated only once in lifetime of SAP system.

Parallel accounting for income tax

Hello Experts,
Please explain configuration process for depreciation as per income tax.
we are using depreciation as per company act, need to extend parallel accounting (general ledger) for income tax.
Thanks & regrds,
Sachin

Hi
For Indian Income Tax Depreciation, you would have to create a new depreciation area. If you are on EhP 5, please have a look at the below business function:
FIN_LOC_CI_8
This business function would need to be activate in SFW5.
The below notes are also useful:
1964284
1997948
783919
Thanks & Regards
Sanil Bhandari

FI-AA: no depreciation in depr. 15 (income tax) in fiscal year when retired

Hello all!
I have a question concerning settings for a FI-AA depreciation key concerning depr. area 15 (income tax; Slovakia):
Calculation of depreciation in depr. area 15 (income tax) must be ZERO in case of retirement during fiscal year (no pro rata until retirement date).
Thanks for an answer.
Bernd

Hi Bernd,
Use a depreciation key with period control 06 At the start of the year for retirements
When you have made depreciations run in old months in the year it will turned back with the retirement posting
Paul

Asset value for Calculation of Tax Depreciation

We have been told that many of the assets created as of 1/1/2008 have a different (lower) tax value than their beginning book value. Book value is correct for standard book depreciation.     Is there a process to update the tax value of assets created in SAP similar to the transaction AS92 used to update values for Converted Assets?
It was suggested that we use the method of Unplanned Depreciation tcode ABAA with TTY 642/652 to change the tax value of the asset. When I tested this I found the various tax depreciation methods were calculated based on the beginning book value for year 1 and not using taking the special depreciation into consideration until subsequent years.   This is using Depreciation Area 10, MACRS, Dep. Key M200.
Is there a better method of altering asset book value for tax purposes or a better way to alter the tax depreciation calculation so it takes Unplanned Depreciation into consideration during year 1?
Current simplified tax depreciation example:
Beg. BV $1,000
unplanned dep posted $100
tax depreciation for year 1 $100
tax depreciation for years 2-10 $88.88
The preferred depreciation is $90 years 1 - 10.
Thanks for your assistance,
Jeff

I think I had the cart before the horse on this problem. The correct way to look at this is what is the best way to get the correct "Net Book Value" and not the correct tax depreciation posting as it never actually gets booked.
By knowing the incorrect Beginning BV, the rate depreciation is applied in year 1 and finally the desired Net BV value at the end of year 1 for tax purposes I am able to calculate the correct Unplanned Depreciation for tax to make everything work out correctly.
correct beginning tax BV $1,200
Beginning Asset Book Value $1,800
depreciation $360 (20% of BV)
Unplanned depreciation $?
Net BV for tax at end of Yr1 $960 ; or 1,200 - (1,200*.2)
With the know values above that makes my unplanned depreciation for Yr 1 to be $480. Year 1 and all following years depreciate correctly after the Unplanned Depreciation is posted.
I am marking this as resolved unless someone sees an error in my thinking.
Thanks,
Jeff

Depreciaton as per Income Tax Act

Hello Sap Experts,
We want to post depreciaiton as per indian income tax act for which we are using dep area 15. But we are not sure that which depreciation key we should use for it.
Is there any standard depreciaiton key for this. If yes how & where to find these. Please help
Thanks & Regards
Deepak Garg

Dear Deepak,
Create Two Depreciation area:-
1. For Normal Book Depreciation Area for Comapnies Act.
2. For Income Tax Depreciation area for IT Act.
Also create Depreciation Keys both for Comapnies Act & IT Act
Regards,
Alok

Income tax issue-URGENT

Dear Guru,
I have run the payroll of April 08 with old income tax slab Now,
Before running the May 08 payroll if I apply the new income tax slab and all budget changes 2008-2009 then, will the system calculate the taxes according to the new budget changes?
Will the income tax be calculated from the month of April 08 or May onwards ?
Please Advised
Regards
MHPO

Dear Santosh thanks,
But what about the old slab April 08 income tax deduction amount is adjused to may 08 to mar 09??
1 I have run the payroll of april 08 with old income tax
2 Then we update new budget changes may 08 month
3 Then we run the may08 payroll
my question is, the income tax be calculated from the month of April 08 or May onwards ?
if the system is calculated income tax from april 08 so what about the old slab April 08 income tax deduction amount is adjused to may 08 to mar 09??
very serious issue
Please Advised
MHPO

Indian Income Tax Depreciation Calculation

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