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TMI BlogCalculation of the written down value (WDV): Clause 41 of Income Tax Bill, 2025 vs. Section 43 of Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... zing and streamlining tax laws in India. Clause 41 of this Bill is particularly significant as it addresses the calculation of the written down value (WDV) of depreciable assets for the purpose of computing income under "Profits and gains of business or profession." This provision is crucial for taxpayers and businesses as it directly impacts the calculation of taxable income and, consequently, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Year: The WDV is the actual cost to the assessee. * Asset Acquired Before the Tax Year: The WDV is the actual cost less depreciation allowed under the current or previous tax acts. * Block of Assets: The WDV is calculated using the formula [(A-D)+B-C]-E, where A, B, C, D, and E represent specific financial metrics related to asset value and depreciation. Sub-Clause (2): Depreciation Allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stency in interpretation across the Act. Practical Implications Clause 41 has significant implications for businesses and individuals. It affects how assets are valued for tax purposes, influencing both short-term tax liabilities and long-term financial planning. Businesses must ensure accurate record-keeping and compliance with the new provisions to avoid penalties and disputes. Additionally, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculating WDV in block assets, whereas Section 43 provides a more general approach. This change aims to reduce ambiguity and enhance precision in tax calculations. * Transfer of Assets: Both provisions address asset transfers in corporate restructuring, but Clause 41 includes updated references to modern business structures like LLPs, reflecting changes in corporate practices. * Depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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