Income Tax Ordinance, 2001

CHAPTER-III

TAX ON TAXABLE INCOME PART IV HEAD OF INCOME: INCOME FROM BUSINESS Division III Deductions: Special Provisions

From: 2023-07-01 - To: 0000-00-00 22. Depreciation.- (1) Subject to this section, a person shall be allowed a deduction for the depreciation of the person’s depreciable assets used in the person’s business in the tax year. (2) Subject to 1[sub-section] (3) 2[***], the depreciation deduction for a tax year shall be computed by applying the rate specified in Part I of the Third Schedule against the written down value of the asset at the beginning of the year 3[;] 3[***] (3) Where a depreciable asset is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the asset 4[was] wholly used to 5[derive] income from business chargeable to tax. 6[Omitted] (5) The written down value of a depreciable asset of a person at the beginning of the tax year shall be - (a) where the asset was acquired in the tax year, the cost of the asset to the personas reduced by any initial allowance in respect of the asset under section 23; or (b) in any other case, the cost of the asset to the person as reduced by the total depreciation deductions (including any initial allowance under section 23) allowed to the person in respect of the asset in previous tax years. 7[Explanation,- For the removal of doubt, it is clarified that where any building, furniture, plant or machinery is used for the purposes of business during any tax year for which the income from such business is exempt, depreciation admissible under sub-section (1) shall be treated to have been allowed in respect of the said tax year and after expiration of the exemption period, written down value of such assets shall be determined after reducing total depreciation deductions (including any initial allowance under section 23) in accordance with clauses (a) and (b) of this sub-section.] (6) Where sub-section (3) applies to a depreciable asset for a tax year, the written down value of the asset shall be computed on the basis that the asset has been solely used to derive income from business chargeable to tax. (7) The total deductions allowed…