Tax Saving via Expenses and Depreciation

Tax Saving via Expenses and Depreciation

There are 4 basic methods of depreciation

            straight line, double declining balance, units of production, sum of years digits

Income Tax Dept of India recommend two methods.

Our CA decide which methods to be used.


1. WDV methods is good for rapidly depreciating assets and tax saving.

2. SLR method is used if you want to sell assets at higher value.

3. Upto 50% is the maximum percentage limit of our total income we can show as our expenses

            If > 50% income is shown then you need to keep Audit of your finances.

4. To purchase expensive car for claiming depreciation as expenses is a financially bad decision

            Please understand that you get deprecation as deduction to save tax.

            But, Why should we make Expenses of 40 Lacs at first place…

            Its total loss to us.

Tax Tips

1. Reliance Jio way.

Jio smartphone was launched at Rs 1500 refundable security deposit.

As phone is not sold to customers, GST is not applicable.

Security deposit is not income, hence no income tax to be paid.

Can you use this idea in personal finance also?

            If your wife has car or house, you take it on rent. Give her refundable Security deposit. (It will be shown in liability section of her balance sheet).She can invest that amount and earn income. If she invest in Tax free investment products, then income will be tax free. Please note, income Clubbing provision is not applicable, ONLY if amount is reflected as liability in balance sheet of wife

2. Loan Method

Husband gives LOAN to wife.

She buys Machines ( X ray, Car, Ventilators etc.).

She rents these machines to the hospital and earn Significant money as RENT and Benefits of Depreciation.You can spread income without Clubbing


Is it good to invest in ELSS or take advantage of home loans under 80C

ELSS >>PPF/SSY>> Home loan principal.

However, some person may choose Home loan over ELSS, that’s OK.

80C mean only FOUR things




            Home Loan principal.

Discard rest of the products in dustbin.

Tax Saving by Loss Set Off


As we know there are 5 headings of income .


House property income

Business and professional income

Capital gain

Other income.

LOSS is NOTHING BUT Negative  Income

LOSS SET OFF means Negative income is deducted from positive income.

S 70  to 74 of income tax mention this loss set off and carry forward loss


1. Business loss can be set off against professional income

            Intrahead SET OFF in present year. If still loss, then then carryforward the loss for 8 years. Business loss can be set off from all income except salary.

2. Audit is necessary for losses and tax filing before due date is a must

3. Intraday trading is speculative business. Loss in intraday can’t be setoff with capital gain.

            Speculative business loss can be set off with only Speculative business income

4. Self occupied house income is NIL, hence nothing can be shown as expense for self occupied house

5. To decrease the tax burden Eg.

            Husband sell shares of a company to save 1 Lac capital gain.

            And Wife buys shares of the same company to avoid loss of opportunity.

6. Rules of capital loss set off

            LONG TERM Capital loss is Set off with Long term gain

            Short Term capital loss is set off with short term and long term capital gain             FUTURE and Option trading loss can be set off with professional income.