Capital Expenditure

Tax Glossary Definition

Capital Expenditure

Capital Expenditure (CapEx) – Capital expenditure represents the investment of funds by a business or government to purchase, enhance, or extend the life of long-term assets such as land, buildings, equipment, or machinery. These costs are capitalized on the balance sheet and depreciated over time, as they contribute to generating benefits that extend beyond a single accounting year.

Example: When a manufacturing firm spends ₹50 lakh on new machinery to expand its production capacity, the amount is recorded as capital expenditure.

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