Glossary
Plain-English definitions for the terms that come up constantly in Indian fixed-asset compliance — depreciation, GST transfers, physical verification, and the audit trail.
- Fixed Asset Register (FAR)
- A fixed asset register is the system of record listing every asset a company owns — its cost, location, depreciation, and current status — used for financial reporting and physical control.
- Schedule II Depreciation
- Schedule II of the Companies Act, 2013 prescribes depreciation based on the useful life of an asset rather than a fixed percentage rate, and governs how Indian companies depreciate assets in their financial statements.
- Income Tax Act Section 32 (Block of Assets)
- Section 32 of the Income Tax Act, 1961 governs depreciation for tax purposes using the written-down value (WDV) method applied to a 'block of assets' — a group of assets in the same class with the same depreciation rate.
- 180-Day Rule
- Under the Income Tax Act, an asset put to use for 180 days or more in the year of acquisition gets a full year's depreciation rate; an asset put to use for less than 180 days gets only half that rate.
- CARO (Companies Auditor's Report Order)
- CARO is an order under the Companies Act requiring statutory auditors to report on specific matters for most companies, including whether fixed assets have been physically verified and whether discrepancies were properly recorded.
- Ghost Asset
- A ghost asset is an asset still recorded and depreciated in the fixed asset register that no longer physically exists — it was lost, scrapped, stolen, or disposed of without the register being updated.
- Component Accounting
- Component accounting depreciates a significant part of an asset separately from the rest of the asset when that part has a materially different useful life — for example, a building's roof versus its structure.
- Physical Verification
- Physical verification is the process of physically confirming that assets recorded in the register actually exist, are in the recorded location, and are in the condition and ownership status the books show.
- Inter-GSTIN Asset Transfer
- An inter-GSTIN asset transfer moves an asset between two branches or units of the same company that hold different GST registrations — which GST law treats as a taxable supply between 'distinct persons,' not an internal movement.
- E-Way Bill
- An e-way bill is an electronic document required under GST law for the movement of goods worth more than a prescribed threshold, generated on the government's e-way bill portal before the goods are transported.
- Audit Trail (Rule 3, Companies (Accounts) Rules)
- Rule 3 of the Companies (Accounts) Rules, in force since 1 April 2023, requires companies using accounting software to maintain an audit trail of every transaction — one that cannot be disabled — recording every edit with the date of the change.
- Agentic FAR (Agentic Fixed Asset Register)
- An agentic fixed asset register uses AI agents to actively reconcile, depreciate, capture, and report on assets — proposing drafts a human reviews — rather than being a passive database that only records what a person enters.