What useful life should be considered when estimating the TAB factor of an intangible asset?

Amortisation of intangible assets is not always tax deductible. Its deductibility depends on the corporate income tax legislation of single countries. Most countries define maximum amortisation rates or minimum number of years in which the amortisation of intangible assets can be deducted, if at all. This page displays the legal tax amortisation periods of the main types of intangible assets.

Summary Table

CountryPatentsTechnologyTrademarkCustomer relationships GoodwillLast update
India44444Apr 2016

Further Detail and Source Legislation

Tax amortisation of intangibles in India is defined by the Income Tax Act of 1961[1] as amended by Finance Act 2012.

Section 32[2] of the Act explicitly includes among others, know-how, patents and trademarks within the definition of intangible assets with deductible depreciation.

In September 2012, the Supreme Court of India declared[3] that Goodwill would fall under the expression “any other business or commercial rights of a similar nature” under clause (b) of Explanation 3 of section 32(i) of the income Tax Act, 1961. Therefore, goodwill is considered to be tax deductible as well.

Intangible assets are grouped into a block of assets can be amortised at a common fixed rate of 25%[4] for tax purposes.

  1. ^ Income Tax Act of 1961
  2. ^ Section 32 of the Income Tax Act of 1961
  3. ^ “Goodwill” is an intangible asset eligible for depreciation, Lexology
  4. ^ New Appendix I of the Income Tac Act

xing linkedin