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Amber Ltd bought a building for ₹20,00,000 (life 4 years, nil scrap). Accounting depreciation is straight-line; tax depreciation is 50% in year 1, 50% in year 2 and nil thereafter. Tax rate 30%. What is the depreciation allowed for tax purposes in year 1?
A₹5,00,000
B₹20,00,000
C₹10,00,000
D₹2,50,000
Answer & Solution
Correct answer: C. ₹10,00,000
1. Tax depreciation in year 1 is 50% of cost.
2. = 50% × ₹20,00,000.
3. = ₹10,00,000.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 — Q.1(a), AS 22 Accounting for Taxes on Income._
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