Keep a per-unit asset register that fills itself from your purchase bills, posts straight-line or written-down-value depreciation to the ledger every month, and handles disposal with the GST capital-goods reversal worked out for you.
Most Indian SMEs run their asset register in a spreadsheet that is reconciled once a year, in a hurry, at audit time. This one is a live part of your books.
Buy four identical laptops on a single purchase-bill line and you get four separately trackable assets — each with its own put-to-use date, depreciation and disposal. Cost is split evenly, with leftover paise absorbed by the last unit so the register always reconciles to the bill.
A daily job charges depreciation for every depreciable asset in use and posts one batch journal entry per month, dated the month end — Depreciation Expense debited, Accumulated Depreciation credited. Nothing to remember, nothing to key in.
Straight-line on original cost, or written-down value on the book value at the start of the financial year. Both are prorated by day across the Indian April-to-March year, and book value never falls below the residual value you set.
Import the assets you already own with their original cost, put-to-use date and the depreciation charged so far. One opening journal entry balances the register against your books, and depreciation resumes from the month you nominate — prior years are never re-posted.
A fixed asset cannot be pushed out through a sales invoice, delivery challan, goods receipt or credit note — those flows reject asset items outright. The only exit is the disposal flow, which is what keeps the register trustworthy.
The fixed-asset, accumulated-depreciation and depreciation-expense accounts each have a full general-ledger statement — opening balance, every movement, closing balance — downloadable as a PDF or shareable as a link.
A spreadsheet register drifts from the ledger the moment either one changes. Keeping both in one system removes the reconciliation entirely.
Record the bill once. The line marked as a fixed asset is flagged as capital goods, debited to the asset account instead of inventory, and turned into register rows in the same transaction.
Because depreciation posts real journal entries, it flows into the trial balance, profit and loss, and balance sheet on its own. There is no year-end catch-up journal to assemble by hand.
If the job does not run, or a month was locked when it tried, the next run replays the gap. A skipped month is a deferred posting, not a lost one.
Selling or scrapping capital goods can trigger an input-tax-credit reversal. The disposal screen previews that figure alongside the gain or loss, so the tax effect is visible before the entry is made.
Fixed assets in an Indian SME rarely arrive as a tidy capitalisation memo. They arrive as a line on a vendor bill, halfway down a purchase that also contains consumables — and by the time anyone thinks about the asset register, the bill has been filed and the year has moved on.
ReadyBooks takes the register off the to-do list by deriving it from the bill you were always going to record. Marking the item as a fixed asset is the only extra decision; everything after that — capital-goods flagging, the debit to the asset account, per-unit register rows, monthly depreciation, the ledger postings — follows automatically.
What is left for you and your CA is the judgement work: choosing method and rate, setting residual values, and deciding when something is genuinely put to use. That is the part worth your attention.
Both methods are supported per asset, so a single register can mix them — which is normal in practice.
Under the straight-line method, each year attracts the same charge: a fixed percentage of the original cost. It suits assets that give up their value evenly over time — office furniture, fit-outs, most plant where usage is steady. Because the base never changes, the annual charge is predictable and easy to explain in a board pack.
Under the written-down-value method, the charge is a percentage of the book value carried at the start of the financial year, so it is heavier in the early years and tapers off. It suits assets that lose value fastest when new — vehicles, computers, most electronics — and it is the shape income-tax depreciation takes in India, which is why many businesses instinctively think in WDV terms.
In ReadyBooks the choice is made per asset, not per company, and the charge is prorated by day across the April-to-March year. An asset put to use on 14 November is charged for the days it was actually in use that year, not for a full year and not for a rounded half. Book value is also floored: an asset will not depreciate below the residual value you set, and never below one rupee, so a fully depreciated asset stays visible in the register instead of disappearing at zero.
This is the distinction that causes the most confusion at year end — so here it is plainly.
Book depreciation is what appears in your financial statements. It is computed asset by asset, using the method, rate and residual value you consider a fair reflection of how the asset is consumed. That is what the monthly journal entries in ReadyBooks post.
Income-tax depreciation is a different computation entirely. It works on blocks of assets grouped by prescribed rate rather than on individual items, it applies its own rates, and it has its own rule for assets bought late in the year: an asset acquired during the year and put to use for less than 180 days in that year attracts only half the block rate for that year.
ReadyBooks gives your CA the movement side of the block computation for a chosen financial year — assets grouped by block rate, additions split at the 180-day line, disposal consideration, and total cost in use. It deliberately does not present an opening written-down value per block, because the register holds book history, not income-tax history, and inventing one would produce a confidently wrong number. The opening block WDV comes from the prior year’s return, which your CA already has; the summary supplies the year’s movement to add to it.
When an asset is sold, scrapped or written off, the disposal flow closes it out: accumulated depreciation is cleared, the asset account is relieved, and the difference against the consideration received lands as a gain or loss. The asset stops depreciating from that point, and it stays in the register with a disposed status rather than being deleted — which is what an auditor tracing last year’s balance will want to see.
There is a GST dimension that is easy to miss. Input tax credit claimed on capital goods can require reversal when the asset leaves the business, under Section 18(6) of the CGST Act read with Rules 40(2) and 44(6) — broadly, credit is treated as consumed over five years, and the unexpired portion becomes repayable, subject to a comparison with the tax on the transaction value.
ReadyBooks previews that reversal figure on the disposal screen so the tax consequence is visible before you commit to the entry. Treat it as a working, not as a filing: it is displayed for your judgement and does not post itself to the ledger. Where the amount is material, it is worth having your CA confirm the basis before it goes into a return.
A recurring problem in SME books is a capital purchase that quietly enters inventory. The bill is recorded, the item lands in stock, weighted-average cost shifts, and the balance sheet carries a laptop as trading goods. It usually surfaces a year later as an unexplained inventory variance.
Marking an item as a fixed asset forecloses that path. The item is forced to be non-stock: it carries no batches, no serial numbers and no attribute variants, and it never generates a stock movement or touches weighted-average cost. The purchase-bill line is debited to the asset account, and the inventory leg of the journal entry is reduced by exactly the asset amount, so the two never overlap.
The guard extends to the outbound side too. Sales invoices, delivery challans, goods receipts and credit or debit notes all reject fixed-asset items, so an asset cannot be quietly sold as stock. Purchase orders are the deliberate exception — you do need to be able to raise a PO for an asset before you own it.
| Field | What it drives |
|---|---|
| Original cost | The depreciation base under the straight-line method, and the opening book value under WDV. |
| Put-to-use date | When depreciation starts, and which side of the income-tax 180-day line the addition falls on. |
| Depreciation method | Straight-line on cost, or written-down value on the book value at the start of the financial year. |
| Depreciation rate | The annual percentage, prorated by day across the April-to-March year. |
| Residual value | The floor below which book value will not fall (and never below ₹1). |
| Income-tax block rate | The block the asset is grouped into for the income-tax movement summary. Falls back to the book rate when unset. |
| Status | In use, disposed or written off. An asset that has left stops depreciating and stays in the register for the audit trail rather than being deleted. |
| Disposal date and consideration | Closes the asset out, drives the gain or loss, and feeds the disposal side of the block summary. |
Source: Reflects the shipped fixed-asset register in ReadyBooks as at 21 July 2026.
Machines now enter the register from the purchase bill itself, one row per unit, with WDV depreciation posting monthly. The fixed-asset account statement ties to the balance sheet without a reconciliation.
Marking the items as fixed assets keeps them out of stock entirely and capitalises them correctly. Each machine is a separate register row with its own asset tag, depreciation and disposal date when it is finally retired.
The client’s register is already live and reconciled. The income-tax block summary gives the year’s additions with the 180-day split and disposals, so only the opening block WDV has to be carried across from the prior return.