India IT Depreciation Calculation

transcript

Income Tax Depreciation

Solution Overview

FI-AA Localization

02 May 2012

Confidential

Agenda

1. IT Depreciation India

2. Solution Overview

3. Prerequisite and Configurations

4. Asset Master

5. Transactions

6. Depreciation

7. Migration reports

8. Additional Information

IT Depreciation India

IT Depreciation India : IT Act 1961

In depreciation computation as per the Indian Income Tax Act 1961, the The

income Tax Act of 1961 requires depreciation to be computed on the block of

assets and not on individual assets.

The assets blocks and their corresponding rates of depreciation are

prescribed by the law.

Depreciation is calculated on the written down value (WDV) of the asset

block after posting relevant asset transactions during the given financial year.

The closing WDV of an asset block for the current year is used as the

Opening WDV of the asset block for the following year.

IT Depreciation India : Requirements

Complex

calculations in

excels

Asset Block definition as per Income Tax Act

Put to use Date concept for Depreciation

Some assets attract Additional Depreciation

Asset Transactions independent of Asset Block

No restrictions on the volume of transactions

Adjustment entries at Block level

Reports for Depreciation Calculation

Data Migration Programs

IT Depreciation India : Terminology

Block Key - specific group of assets in respect of

which the same percentage of

depreciation is prescribed

Opening

Written Down value of the block of Asset

at year start

IT Dep. Area - identified Depreciation area which has the

relevant transactions for IT calculation

Transaction

Type Groups-

defines how a transaction type should be

treated for a block

Solution Overview

Block assignment:

Define Asset Block

Assign Block (CSMD)

Maintain Opening WDV

Additional customizing

Transactions:

Acquisition

Investment

Support

Transfer In

Transfer out

Retirement

Others..

Assets

Solution Overview : Concept

Reports:

Depreciation

Projection

Transaction

Details

Migration Reports:

Asset Blocks

Opening WDV

Assigning Block

Block Transactions

Update Asset

transactions to Blocks

Adjustment Transactions

Reporting

Prerequisite and

Configuration

Prerequisite – Activate Business Function

1. Business Function FIN_LOC_CI_8 must be activated in order to make

the new solution available in the system

Availability : ECC 600 Enhancement Package 5

2. Ensure that Enterprise Extension EA-FIN (Financials Extension) is

active in your system.

Prerequisite – Add India Specific fields

Activate India Specific fields

Group box S0400 must be added to Tab Layouts of Asset Classes

Configuration - Assign Transaction types

Only Transaction types assigned here shall be used for IT depreciation

calculation according to the mapped Transaction Type Group

Configuration- Maintain Area for IT Depreciation

Asset Transactions shall be read from the depreciation area

maintained here

Configuration – Define Asset Block

Block can also be used for

Additional Depreciation

Asset Master

Asset Master – India specific Data

If left blank, Ordinary

Depreciation Start Date is

considered

Attracts the Additional Depreciation

Percentage (Additional Block key is not used

for reporting)

Assign each asset to respective block in Asset Master Data

Transactions

Transactions- Maintain Opening WDV of Blocks

Each Block must

have Opening

WDV maintained

Transactions- Individual assets

Post Transactions( Acquisitions, retirements, Transfers) on individual Assets

Transactions- Block

Asset Transactions summarized at block for each period

Shows cumulated values for

each Block

Transactions– Block Adjustments

Adjustment to Transactions – due to current year Transactions

Transactions– Block Adjustments

Opening WDV Adjustment – due to Prior Year Transactions

Depreciation

Depreciation-Calculation

Depreciation of Block

( Opening WDV

+ Adjustment to Opening WDV and Adjustments to Transactions greater than 180 days

+ Acquisitions for Greater than 180 Days+ Transfer In Greater than180 Days

+ Retirements + Transfer out + Credit Memo + Investment support + Post Capitalization

) X Block Depreciation Percentage

( Adjustments to Transactions less than 180 days

+ Acquisitions for Less than 180 Days

+ Transfer In Less than 180 Days

) X Block Depreciation Percentage / 2

Depreciation-Example

Opening WDV of Block = 1,00,000 INR

Dep. Percentage prescribed for the Block = 10%

Acquisitions on assets put to use for less than 180 days = 50,000

Out of this Assets with Acquisition of 10,000 attracts Add. Dep. of 7%

Acquisition on the assets put to use for less than 180 days = 30,000

Depreciation = ( Opening WDV + Acquisitions put to use before 27 Sept.) X 10%

+ Acquisitions put to use after 26 Sept X 10/2 %

+ Acquisition of 10,000 attracts Addt. Dep. X 7%

= ( 1,00,000 + 50,000 ) X 10%

+ 30,000 X 10/2 %

+ 10,000 X 7 %

= 17,200 INR

Depreciation-IT Depreciation Report

Calculated Depreciation Amount

for each Block

Final calculations are performed as per IT depreciation rules

Depreciation- Different amounts

Following list of columns are reported as part of Depreciation report:

Opening WDV

Different Adjustment amounts

Acquisitions

Retirements

Transfers

Capital Gain/Loss

Post Capitalization

Credit Memo

Investment support

Depreciation

Closing WDV

Depreciation: Drill Down report

The Report helps user to track down to the individual assets and transactions of a

Depreciation: Projection Report

Project depreciation values for the remaining part of the Fiscal

year based on probable transaction values

Migration reports

Migration Reports: Preparing for first time

Asset Block details can be fed into the system using spreadsheet

Migration Reports : Preparing for first time

Assignment of existing assets to Asset Blocks

Opening WDV for the existing Asset Block

Migration Reports : Preparing for first time

Additional Details

Additional Details- SAP Easy Access Menu

Additional Details- IMG Nodes

Thank You!

Soumya R

Globalization Product Management

Soumya.r@sap.com

Praveen Kumar

pravee.kumar@sap.com

Praveen C

praveen.c@sap.com

India IT Depreciation Calculation

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