The direct tax proposals in the recent Union Budget provide for
allowing depreciation on intangible assets (which would now from a
separate block of assets) at the rate of 25 per cent on
written-down (that is, depreciated) value.
Consequently, the existing provisions for amortisation of
capital expenditure on acquisition of patents or copyrights (over a
maximum of 14 years or the useful life of the patent/copyright
whichever is lesser) and technical know-how (over a period of six
years) have been deleted.
The implication is that 99 per cent of the cost of acquisition
of a patent or copyright would be depreciated within 14 years.
Unlike the prevailing provisions where the the cost is amortised in
equal installments, depreciation on written down value basis would
allow for a significantly higher charge against taxable profits in
the initial years. However, there is no provision for an
accelerated rate of depreciation in cases where the life of the
intangible asset
