0334 9590247
info@kkconsultant.net
Facebook
Twitter
LinkedIn
    Menu
    • Home
    • Company
      • About KK Consultant (SMC-PVT) Ltd
      • Vision, Mission & Values
      • Core Team
      • Clients
      • Certificates
    • Services
      • Accounting & Book Keeping 

        Accounting Outsourcing
        Accounts Receivable and Payables
        Payroll Processing
        Inventory Management
        Accounts Reconciliation
        Financial Reporting
        Fixed Asset Management
        ERP / Accounting System Implementation
      • Financial Management Services

        Budgeting and Financial Forecasting
        Financial Feasibility
        Cost Accounting System Implementation
      • Accredited Registration and Certifications

        Intellectual Property Organization
        Pakistan Engineering Council
        Pakistan Software Export Board Chamber Registration
        ISO 9001
      • Consultancy For Registration

        Single Member Company
        Private Company Registration
        Private Company with Foreign Director
        Public Limited Company
        Public Limited Company with Foreign Director
        Liaison Office and Branch Office
        Foreign Company / Foreign Direct Investment
        Limited Liability Partnership (LLP)
        Corporate Laws Secretarial Practices
        NGO and Trust Registration
        Partnership Registration
      • Tax Services

        Employment Taxation
        Personal Taxation
        Partnership / AOP Taxation
        Corporate Taxation
        NGO Taxation
        Provincial Sales Tax
        Tax Advisory Services
        WeBOC Registration
    • Corporate
        • Company Name Reservation
        • Incorporation of a Company
        • Memorandum of Association
        • Articles of Association
        • Winding up of Company
        • Shares Transfer/Change of Directors
        • Changes in MOA
        • Alteration in Paid up Capital
        • Alteration in Authorize Capital
        • Change in Company Address
        • Conversion Pvt to SMC-Pvt Ltd.
        • Conversion of SMC to Pvt Ltd.
        • Conversion of Public to Pvt Ltd
        • Conversion of Pvt to Public Ltd
        • Appointment of Auditor
        • Appointment of Legal Adviser
        • Companies Act, 2017
        • Limited Liability Partnership Act, 2017
        • Single Member Companies Rules,2003
        • Companies Incorporation Regulations
    • Tax
      • Tax Rate for Salaried Individuals
      • Withholding Tax Rates
      • Tax Rate for AOP’s and Business Individuals
      • Corporate Tax Rate
      • Tax and Accounting Depreciation
      • Tax Advisory Services
      • Statement of Tax Collected and Deducted
      • Bookkeeping and Accounting for Tax Purposes
      • Employment Taxation
        • Corporate Taxation
      • Advance Tax
      • Check NTN
      • Changes in NTN
      • Check Active Tax Payer
      • Enrollment- Individuals
      • Enrollment – AOP’s and Companies
    • Knowledge Center
      • SECP Compliance
      • Sales Tax Rate
      • Professional Tax
      • Taxes on IT Exports Services
    • Contact us
    CLOSE

Tax and Accounting Depreciation

Home Tax and Accounting Depreciation

Tax and Accounting Depreciation

Accounting profit and tax profit are two different concepts and both are determined using different basis. This is the major reason which creates differences between tax and accounting profits. Mostly companies / businesses have different accounting profit and tax profit just due to use of different depreciation rates for tax and financial reporting.

 

Depreciation rates income tax ordinance

                                                           Tax and Accounting Depreciation

Third Schedule Income tax Ordinance, 2001 describes the tax depreciation rates for different types of assets.

For accounting purpose we have to assess the useful lives of the assets and their appreciable amounts (cost less residual value, if any). Depreciation rate would be the rate which will charge of the appreciable amount to profit and loss account spanning over the useful life so determined.

Use of different rate of depreciation for tax and accounting purposes rises the issue of differed taxation,this issue is addressed well in tax accounting . Tax and Accounting Depreciation has direct impact on the income of any organization.

Use of tax depreciation rate ,while making financial statements, is highly recommended to avoid the lengthy process of keeping record and separate schedules of fixed asset under accounting and tax rate of depreciation.

Initial Allowance

Tax depreciation is provided on fixed assets after providing for initial allowance. Initial allowance is provided only for the first year of operation on certain fixed assets that have been prescribed in Section 23 of the Income Tax Ordinance, 2001 as eligible depreciable assets. First year of operation means the first year in which asset has been used for business or the tax year in which commercial production has been started.

After providing initial allowance depreciation will also be charged under section 22 of the ITO 2001. Depreciation rates and initial allowance rates are given in Part I and Part II of Third Schedule to the ITO 2001 respectively.

Quick Links

Employee Login
Payment Methods
Careers
Download
Tracking
Scam Protection

Accredited by

Our Courier Partners

Important Links

FBR
SECP
IPO
PEC
PSEB
Company Ordinance 1984
Company Ordinance 2016
Check NTN
Check Name Availability
Check Active Taxpayer

Registered with

Blog

  • SECP Compliances for Year 2022
  • Income Tax Treatment for IT Companies for Tax Year 2023
  • Third Schedule Products in Sales Tax Act 1990 – Tax Year 2022
  • Taxation on IT Export and Services for Tax year 2022-2023
  • Appointment of new Director in SECP
  • Steps Involved In The Registration of Branch Office In Pakistan
© Copyright 2012-2022 All rights reserved. KK Consultant (SMC-PVT) LIMITED

WhatsApp us