Unabsorbed Depreciation

Tax Glossary Definition

Unabsorbed Depreciation

Unabsorbed Depreciation – Unabsorbed depreciation refers to the depreciation expense that cannot be fully set off against income in the current financial year. This balance can be carried forward to subsequent years and set off against business or professional income, subject to Income Tax provisions.

Example: Depreciation of ₹2 lakh on machinery exceeds current year income and the unabsorbed portion is carried forward to the next year.

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