Why rates of depreciation as per indian companies act and indian income tax act are different?

Its simple, company accounting is not for tax purposes. its proportioned in such order that mostly it pays gives lesser profit in start and higher later. tax authorities do not think that way, they usulay try to equalize. however the net effect remains the same.

Company law considers normally actual life of the machinery etc and decides the depreciation rates. It is very technically decided thing long ago and the authorities do not change it though new modern short lived technology comes.

The Income tax law has many purposes behind allowing depreciation. If the Finance ministry wants to promote use of certain things, it allows higher depreciation. So that the public is encouraged to use it as it results in reducing tax burden. (for example, use of computers, solar energy and so on). But the changes are frequent.

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