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.

Businesses dealing with carried forward losses and depreciation should consider professional tax filing services online to ensure accurate set-off, compliance with Income Tax Act provisions, and proper reporting in ITR filings without missing eligible tax benefits.

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

Consulting an experienced income tax expert can help businesses correctly adjust unabsorbed depreciation against future profits while ensuring compliance with the latest amendments and avoiding scrutiny or notices from the Income Tax Department.

Proper tax return preparation is crucial when claiming unabsorbed depreciation, as incorrect disclosures may lead to denial of carry forward benefits or tax mismatches during assessment proceedings under the Income Tax Act.