Taxpayers claiming depreciation, initial allowance or amortisation deductions must provide detailed asset information, acquisition costs, applicable rates and written-down values when filing income tax returns.
The Federal Board of Revenue (FBR) has specified the particulars taxpayers must furnish when claiming depreciation, initial allowance and amortisation deductions for Tax Year 2027.
According to Rule 12 of the Income Tax Rules, 2002, updated up to September 15, 2026, taxpayers must provide prescribed asset details when filing income tax returns to claim deductions under Sections 22, 23 and 24 of the Income Tax Ordinance, 2001, read with the Third Schedule.
Details required for depreciation claims
The FBR requires taxpayers to provide the following information:
1. Description of each depreciable asset and intangible asset for which a deduction is claimed.
2. Extent of business use where an asset is used partly to generate taxable business income.
3. Acquisition date of assets purchased during the tax year.
4. Opening written-down value of each depreciable asset and cost of each intangible asset.
5. Capital expenditure incurred on additions, alterations, improvements or extensions, including any applicable limits on deductible expenditure.
6. Total value of each depreciable asset eligible for depreciation, after adjusting for initial allowance.
7. Applicable depreciation and initial allowance rates, along with the normal useful life of intangible assets.
8. Annual depreciation, initial allowance and amortisation amounts claimed.
9. Total deductions claimed under all three categories.
10. Closing written-down value of depreciable assets, intangible asset costs and remaining useful life.
The rules also require additions to intangible assets to be disclosed separately.
Requirements for disposed assets
Rule 12 also prescribes additional reporting requirements where a taxpayer disposes of a depreciable or intangible asset during the tax year.
In such cases, the taxpayer must disclose the consideration received from the disposal, the asset’s written-down value at the beginning of the tax year and the resulting excess or deficit.
The difference between the disposal consideration and the opening written-down value will determine the relevant excess or deficit to be reported.
Applicable tax provisions
The requirements relate to depreciation deductions under Section 22, initial allowance under Section 23 and amortisation deductions under Section 24 of the Income Tax Ordinance, 2001.
These provisions apply to Tax Year 2027, covering the period from July 1, 2026, to June 30, 2027.
The FBR’s reporting requirements establish the asset-level information taxpayers must provide to support their depreciation and amortisation claims in income tax returns.