Explain the various types of depreciation allowances or Explain the conditions and rates regarding the depreciation 1. Initial depreciation 2. Normal depreciation
Initial allowances for depreciation :-
One person can avail this allowance if the fulfills the following conditions :
- Eligible Assets : This allowance is allowed only for those assets which are depreciated assets.
- Years Allowed : In respect of the following years initial allowance of depreciation is allowed.
(i). The year in which first time in the business or profession.
(ii). The year in which commercial production was produced.
- Rate : This allowance is allowed at the rate of 50% of the cost of asset (50%).
- Ownership of the Asset : This allowance is allowed if the same asset is owned by the same person.
Allowances Not Allowed :-
Initial allowance for depreciation is not allowed in the following assets.
(i). Any furniture or fitting.
(ii). Already used machinery or plant.
(iii). A road transport vehicle not lying for hire.
(iv). If any asset deduction is allowed under any other income tax ordinance.
Normal Depreciation :-
The above depreciation is calculated at the prescribed rate for various typed of assets on the written down value of a depreciable asset. According the following rate normal depreciation allowed.
Class Of Assets Description Rate Of The Written Down
1. Building (general) 5%
2. Factory, Workshop, Hotel 10%
3. Quarters for labour 10%
4. Furniture or Fitting 10%
5. Machinery and Plant 10%
6. Personal Computer & Allied items 30%
7. Technical & Professional books 20%
8. Ships 5%
9. Motor Vehicles 20%