Keep a Fixed Asset Register Next to Tally or Pay for It at Audit

In most small companies, the "fixed asset register" is the Tally ledger for Plant and Machinery and an Excel depreciation sheet that someone rebuilds every May. Tally keeps one ledger per asset class; it does not know that the class holds a DG set sold in September, a lathe put to use in October and four laptops in the accounts department. The auditor needs exactly that detail — for CARO, for the Schedule III note and for the tax audit — and if it is not kept during the year, it gets rebuilt at audit time, at audit rates. This article sets out what the register should hold, how it ties to Tally, and a routine the client's accountant can follow. Law as at 3 November 2026; figures are illustrative.

What Tally holds, and what it does not

In TallyPrime, fixed assets are ledgers under the Fixed Assets group, usually one per class: Land, Buildings, Plant and Machinery, Furniture, Vehicles, Computers. Purchases are debited to the class ledger, and depreciation is a journal voucher crediting it. Tally Solutions' own help is direct on the point: TallyPrime does not support configuring a depreciation percentage in the fixed asset ledger or the item for automatic calculation; depreciation is recorded manually by journal, monthly or yearly. For a period-wise break-up, Tally's help suggests allocating depreciation to cost categories and cost centres and reading the cost category summary.

So Tally can give you, per class, the opening balance, additions, credits for sales and depreciation. What it does not give you, unless the client builds it, is:

• which individual assets make up the balance, where they are and when each was put to use;
• the gross block and accumulated depreciation separately, where depreciation is credited straight to the asset ledger (the usual small-company practice);
• useful life, residual value and the Schedule II working per asset;
• the income-tax block, rate and written down value, which is a separate computation that does not belong in the books.

That is the register's job. It can be an Excel workbook or a fixed asset module, but it must be kept alongside Tally and reconciled to it.

Why the auditor needs it: CARO 3(i), Schedule III and AS 10

Where CARO 2020 applies (small companies and many private companies are outside it — check CARO 2020 applicability first), clause 3(i) has five parts, and every one of them starts from the register:

ICAI's Guidance Note on CARO 2020 (Revised 2022, para 41) says the Order does not define "proper records" but lists what PPE records should generally contain: a description sufficient for identification, classification, situation, quantity, original cost, year of purchase, date available for use, useful life, residual value, component-wise break-up where applicable, revaluation adjustments and date, rate or basis of depreciation, current-year and accumulated depreciation, impairment, and particulars of sale, discarding or destruction. It adds that the totals per head should reconcile with the books, that fully depreciated and retired assets stay in the register, and that where no register is kept, it is a serious documentation and control lacuna which the auditor should mention under this clause. On physical verification (para 43), annual verification may be reasonable, and where it is impracticable, the programme should cover all assets at least once in every three years. The common slips on 3(i)(c) are covered in CARO 2020 clauses that are easy to get wrong.

CARO aside, the register is what makes the accounts possible. Schedule III requires a reconciliation of gross and net carrying amounts for each class — additions, disposals, depreciation — and a CWIP ageing schedule, which needs dated amounts (the format is worked through in PPE and CWIP ageing under Schedule III). Under AS 10 (Revised), recognition of cost stops, and depreciation begins, when the asset is in the location and condition necessary for it to operate as intended (paras 21 and 57), and each part with a cost significant to the total is depreciated separately (para 45). Schedule II sets useful lives in Part C, caps residual value at 5% of original cost unless a different figure is disclosed and justified with technical advice, and requires additions and disposals to be depreciated pro rata (note 2). None of that can be done from a class ledger.

The columns of a good register

Small items such as chairs and tables can be grouped into one line per lot, as the Guidance Note allows, and depreciation can be shown for a group where the useful life is the same.

A sample register, tied to Tally

A company's register at 31 March 2026 (Companies Act, straight-line, residual value 5%; days counted including the date put to use; ₹, rounded to the rupee):

The workings: the DG set's annual charge is (6,00,000 − 30,000) ÷ 15 = 38,000; five years to 31 March 2025 give 1,90,000; 183 days to the date of sale give 19,052, so its carrying amount at sale is 6,00,000 − 2,09,052 = 3,90,948 and the loss on sale is 1,50,948. The lathe: 76,000 a year × 173/365 = 36,022. The car: 1,12,812.50 × 290/365 = 89,632. The laptops: 3,04,000 ÷ 3 = 1,01,333 a year (Part C gives end-user devices three years).

For the Schedule III note, gross block moves from 39,20,000 to 54,70,000 (additions 21,50,000, disposal 6,00,000), and accumulated depreciation from 2,91,333 to 3,28,320 (charge 2,46,039, on disposal 2,09,052). Then tie to Tally:

If the Plant and Machinery ledger shows anything else, the usual causes are a sale booked to income instead of to the asset ledger, repairs capitalised (or a machine expensed), or depreciation journalled on last year's balance including the sold DG set. On the sale itself, check that GST was charged; section 18(6) of the CGST Act sets the amount for capital goods on which credit was taken.

The income-tax columns (FY 2025-26)

FY 2025-26 is still governed by the Income-tax Act, 1961: depreciation is on the written down value of each block (section 32 read with section 43(6)), sale proceeds reduce the block, and under the second proviso to section 32(1) an asset acquired in the year and put to use for less than 180 days gets half the rate. The same register, by block, for a company that has opted for section 115BAA (so no additional depreciation under section 32(1)(iia)):

Plant and machinery: the opening block less the DG set's proceeds is 26,223 at 15% = 3,933; the lathe was put to use on 10 October 2025, only 173 days before 31 March, so it gets 7.5%: 90,000. Had it been put to use on or before 3 October (180 days or more), it would have taken the full 15%. That one date is worth 90,000 of deduction this year, which is why the register needs the installation report, not just the invoice date. A manufacturer not taxed under section 115BAA would also claim additional depreciation of 20% on a new machine (10% if used for less than 180 days, the balance the next year), so the date matters twice over. The car, put to use in June, takes the full 15%. Total tax depreciation of 3,13,233 against book depreciation of 2,46,039 feeds the deferred tax working.

From tax year 2026-27 the Income-tax Act, 2025 applies; its depreciation provision (section 33) keeps the block-of-assets method and the half-rate rule for assets used for less than 180 days in the year of acquisition. Keep the same columns and carry the closing WDVs forward.

A monthly and year-end routine for the client's accountant

Two points for the auditor. First, the Guidance Note accepts an electronic register only where it cannot be altered without authorisation and audit trail and can be read or printed; an Excel file passed around by email usually fails the first test, so ask for a printout authenticated by management and keep it on file. Second, if the client has no register at all, do not build one quietly as part of the audit: report under 3(i)(a) where CARO applies, raise it on the year-end query list, and quote separately for reconstructing it. A register started this year, with opening balances agreed to the last audited accounts, turns next year's fixed asset work into a tie-out.

Frequently asked questions

Sources

• ICAI — Guidance Note on CARO 2020 (Revised 2022 Edition), paras 41 to 46 (clause 3(i))
• Companies Act, 2013 — Schedule II (Parts A and C, notes 2 to 4) and Schedule III Division I (India Code, as amended)
• AS 10 (Revised) Property, Plant and Equipment, paras 17, 21, 45 and 57 — ICAI
• ICAI — Guidance Note on Division I – Non Ind AS Schedule III (Revised January 2022)
• Tally Solutions — TallyPrime Help: Accounting FAQ (depreciation by journal voucher; depreciation chart through cost centres)
• Income-tax Act, 1961 — sections 32(1) (second proviso) and 43(6)
• Income-tax Act, 2025 (Gazette, 21 August 2025) — section 33
• Central Goods and Services Tax Act, 2017 — sections 16(3), 17(5) and 18(6)

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