If you run your medical practice under an LLP (Limited Liability Partnership) or plan to invest in assets like clinic equipment, hospital furniture, or a training center, there’s a smart way to save tax — it’s called Depreciation.
Let’s understand how depreciation tax benefits work for doctors and healthcare professionals in India through LLPs.
🔍 What is Depreciation?
Depreciation means the decrease in the value of an asset over time due to use, wear and tear, or aging.
Under the Income Tax Act, depreciation is considered a non-cash expense, which means:
- You don’t pay for it every year
- But you can still deduct it from your income while calculating taxes
✅ Why Is Depreciation a Tax Benefit?
Every year, your LLP can deduct a part of the asset’s cost as depreciation. This:
- Lowers your taxable profit
- Helps you pay less tax
- Doesn’t require any extra cash outflow
It’s a smart and legal way to save on income tax.
💼 How Depreciation Works in an LLP
LLPs are legal business entities, so the LLP owns the clinic or hospital assets, not you as a partner personally.
Here’s how it works step by step:
- LLP buys medical equipment, computers, furniture, or even buildings
- These are listed in the LLP’s books as fixed assets
- Each year, a fixed percentage is written off as depreciation
- This amount is deducted from business income
- Result: Lower profit = Lower tax
📌 Key Things to Remember
- ✅ Depreciation is allowed only on business-use assets
- ✅ The asset must be owned by the LLP, not used personally
- 🚫 No depreciation on land
- 📅 If you use the asset for less than 180 days in the first year, you can claim only 50% of the rate
- 📘 Maintain a Fixed Asset Register and proper books of accounts
🧾 How to Claim Depreciation in LLP?
- File ITR-5 for your LLP every year
- Use Appendix I depreciation rates under the Income Tax Act (not the Companies Act)
- Keep proof of purchase, usage, and depreciation records
🔁 Bonus Tip: Unabsorbed Depreciation
Even if your LLP’s profit is too low this year, you can carry forward the depreciation and adjust it against future profits. This is called unabsorbed depreciation, and it’s a helpful way to manage long-term tax savings.
📣 Ready to Maximize Your Tax Benefits?
If you’re a doctor or healthcare entrepreneur running an LLP, don’t miss out on depreciation benefits. Proper planning can save you lakhs in taxes over time.
💬 Talk to your Chartered Accountant today to structure your assets wisely and file your taxes correctly.
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