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What Is Depreciation
While computing profits and gains from business or profession, a taxpayer can claim depreciation on all those assets which he has acquired and used for the purpose of his business or profession. Different depreciation rates are prescribed for different nature of assets. This write up lists down all such depreciation rates.
Calculation of Depreciation
Depreciation is Calculated as per the provisions of income tax act for income tax return and companies are calculated as per companies act. So Depreciation is calculated by two method one is as per companies act or one is as per income tax act. Today we provide depreciation chart as per income tax act for easily calculate depreciation.
Depreciation Rate Chart As Per Income Tax
As per Income Tax Act 1962 Depreciation calculation is mandatory. So All firms who furnish return to income tax return calculate depreciation as per income tax act
Depreciation rates as per I.T Act for most commonly used assets
| Sl.No | Asset
Class | Asset Type | Rate of Depreciation |
| 1 | Building | Residential buildings not including boarding houses and hotels | 5% |
| 2 | Building | Boarding houses and hotels | 10% |
| 3 | Building | Purely temporary constructions like wooden structures | 100% |
| 4 | Furniture | Any fittings / furniture including electrical fittings | 10% |
| 5 | Plant and machinery | Motor cars excluding those used in a business of running them on hire | 15% |
| 6 | Plant and machinery | Motor cars excluding those used in a business of running them on hire purchased on or after 23 August 2019 but before the 1 April 2020 and is put to use before 1 April 2020 | 30% |
| 7 | Plant and machinery | Lorries/taxis/motor buses used in a business of running them on hire | 30% |
| 8 | Plant and machinery | Lorries/taxis/motor buses used in a business of running them on hire purchased on or after 23 August 2019 but before the 1 April 2020 and is put to use before 1 April 2020 | 45% |
| 9 | Plant and machinery | Computers and computer software | 40% |
| 10 | Plant and machinery | Books owned by assessee carrying on a profession being annual publications | 100% |
| 11 | Plant and machinery | Books owned by assessee carrying on profession not being annual publications | 60% |
| 12 | Plant and machinery | Books owned by assessee carrying on business in running lending libraries | 100% |
| 13 | Intangible assets | Franchise, trademark, patents, license, copyright, know-how or other commercial or business rights of similar nature | 25% |
6. Depreciation Rates as per the Income Tax Act
Part A Tangible Assets:
| Asset Class | Sl.No | Asset Type | Rate of Depreciation |
| Building | 1 | Buildings used primarily for residential reasons (excluding boarding houses and hotels) | 5% |
| 2 | Buildings apart from those used primarily for residential reasons and not covered by subitems 1 (above) and 3 (below) | 100% | |
| 3 | Buildings procured on or after September 1, 2002, for installing plant and machinery forming part of water treatment system or water supply project and which is used for the purpose of business of providing infrastructure facilities under clause (i) of subsection (4) of section 80-IA | 100% | |
| 4 | Purely temporary erections like wooden structures | 100% | |
| Furniture and fittings | Furniture and fittings including electrical fittings | 10% | |
| Plant and machinery | 1 | Plant and machinery excluding those covered by sub-items (2), (3) and (8) below | 15% |
| 2 | Motor cars, excluding those used in a business of running them on hire, procured or put to use on or after April 1, 1990 | 15% | |
| 3(i) | Aeroplanes, Aero Engines | 40% | |
| 3(ii) | Motor taxis, motor buses and motor lorries used in a business of running them on hire | 30% | |
| 3(iii) | Commercial vehicle which is procured by the assessee on or after October 1, 1998, but before April 1, 1999, and is used for any period of time prior to April 1, 1999, for the purpose of profession or business in agreement with the third proviso to clause (ii) of sub-section (1) of section 32 | 40% | |
| 3(iv) | New commercial vehicle procured on or after October 1, 1998, but prior to April 1, 1999, in replacement of condemned vehicle of more than 15 years of age and is used for any period of time prior to April 1, 1999, for the purpose of profession or business in agreement with the third proviso to clause (ii) of sub-section (1) of section 32 | 60% | |
| 3(v) | New commercial vehicle procured on or after April 1, 1999, but before April 1, 2000, in replacement of condemned vehicle of more than 15 years of age and is put to use prior to April 1, 2000, for the purposes of profession or business in agreement with the second proviso to clause (ii) of sub-section (1) of section 32 | 60% | |
| 3(vi) | New commercial vehicle procured on or after April 1, 2001, but before April 1, 2002, and is put to use before April 1, 2002, for the purpose of profession or business | 50% | |
| 3(vii) | Moulds used in plastic and rubber goods factories | 30% | |
| 3(viii) | Air pollution control equipment
| 100% | |
| 3(ix) | Water pollution control equipment
| 30% | |
| 3(x) | (a) Solid waste, control equipment Cryolite / mineral / lime / caustic / chrome recovery system (b) Resource recovery and solid waste recycling systems | 100% | |
| 3(xi) | Plant and machinery used in semiconductor industry covering all integrated circuits (ICs) (not including hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration / very large scale integration (LSI/VLSI) as also discrete semiconductor devices like diodes, triacs, thyristors, transistors, etc., except those covered by entries (viii), (ix), (x) of this sub-item and sub-item (8) below | 30% | |
| 3(xi)a | Life Saving medical equipment
| 40% | |
| 4 | Containers made of plastic or glass used as refills | 50% | |
| 5 | Computers including computer software | 60% | |
| 6 | Plant and machinery, used in processing, weaving and garment sector of textile industry, which is bought under TUFS on or after April 1, 2001, but prior to April 1, 2004, and is put to use prior to April 1, 2004 | 50% | |
| 7 | Plant and machinery procured and installed on or after September 1, 2002, in a water treatment system or a water supply project and put to use for the purpose of business of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA | 100% | |
| 8 | 1. Wooden parts used in artificial silk manufacturing machinery | 100% | |
| 2. Match factories, wooden match frames | |||
| 3. Cinematograph films, bulbs of studio lights | 100% | ||
| 4. Salt works, condensers, reservoirs, salt pans, etc., made of clayey, sandy or earthy material or any other similar material | 100% | ||
| 5. Quarries and mines | 100% | ||
| Sand stowing pipes, winding ropes, tubs and haulage ropes | |||
| Safety lamps | |||
| 6. Flour mills, rollers | |||
| 7. Sugar works, rollers | 80% | ||
| 8. Steel and iron industry, rolling mill rolls | 80% | ||
| 9. Energy saving devices | 80% | ||
| (A) Furnaces and specialised boilers | |||
| (i) Fluidized bed boilers / ignifluid | 80% | ||
| (ii) Continuous pusher type furnaces and flameless furnaces | |||
| (iii) High efficiency boilers | |||
| (iv) Fluidized bed type heat treatment | |||
| (B) Instrumentation and monitoring system for monitoring energy flows | 80% | ||
| (i) Digital heat loss meters | |||
| (ii) Automatic electrical load monitoring systems | |||
| (iii) Infrared thermography | |||
| (iv) Microprocessor based control systems | |||
| (v) Meters for measuring heat losses, steam flow, furnace oil flow, power factor and electric energy meters | |||
| (vi) Exhaust gas analysers | |||
| (vii) Maximum demand indicator and clamp on power meters | |||
| (viii) Fuel oil pump test bench | |||
| (C) Waste heat recovery equipment | 80% | ||
| (i) Air pre-heaters and recuperators | |||
| (ii) Feed water heaters and economisers | |||
| (iii) Thermal energy wheel for low and high temperature heat recovery | |||
| (iv) Heat pumps | |||
| (D) Co-generation systems | 80% | ||
| (i) Controlled extraction, back pressure pass out, extraction cum condensing turbines for cogeneration along with pressure boilers | |||
| (ii) Organic rankine cycle power systems | |||
| (iii) Vapour absorption refrigeration systems | |||
| (iv) Low inlet pressure small steam turbines | |||
| (E) Electrical equipment | 80% | ||
| (i) Synchronous condenser systems and shunt capacitors | |||
| (ii) Relays (automatic power cut off devices) | |||
| (iii) Power factor controller for AC motors | |||
| (iv) Automatic voltage controller | |||
| (v) Solid state devices for controlling motor speeds | |||
| (vi) FACT (Flexible AC Transmission) devices, Thyristor controlled series compensation equipment | |||
| (vii) Thermally energy-efficient stenters | |||
| (viii) Series compensation equipment | |||
| (ix) TOD (Time of Day) energy meters | |||
| (x) Intelligent electronic devices/remote terminal units, computer software/hardware, bridges/router, other required equipment and associated communication systems for data acquisition systems and supervisory control, distribution management systems and energy management systems for power transmission systems | |||
| (xi) Special energy meters for ABT (Availability Based Tariff) | |||
| (F) Burners | 80% | ||
| (i) Zero to ten per cent excess air burners | |||
| (ii) Burners using air with high preheat temperature (above 300 degrees Celsius) | |||
| (iii) Emulsion burners | |||
| (G) Other equipment | 80% | ||
| (i) Mechanical vapour recompressors | |||
| (ii) Wet air oxidation equipment for recovery of heat and chemicals | |||
| (iii) Automatic microprocessor based load demand controllers | |||
| (iv) Thin film evaporators | |||
| (v) Fluid couplings and fluid drives | |||
| (vi) Coal based producer gas plants | |||
| (vii) Super-charges/turbo charges | |||
| (viii) Sealed radiation sources for radiation processing plants | |||
| 10. Gas cylinders including regulators and valves | 60% | ||
| 11. Glass manufacturing concerns, Direct fire glass melting furnaces | 60% | ||
| 12. Mineral oil concerns | 60% | ||
| (i) Plant used in field operations (above ground) distribution, returnable packages | |||
| (ii) Plant used in field operations (below ground), but not including kerbside pumps including fittings and tanks used in field operations (distribution) by mineral oil concerns | |||
| 13. Renewable energy devices | 60% | ||
| (i) Pipe type and concentrating solar collectors | |||
| (ii) Flat plate solar collectors | |||
| (iii) Solar cookers | |||
| (iv) Air/fluid/gas heating systems | |||
| (v) Solar water heaters and systems | |||
| (vi) Solar crop drivers and systems | |||
| (vii) Solar steels and desalination systems | |||
| (viii) Solar refrigeration, air conditioning systems and cold storages | |||
| (ix) Solar pumps based on solar-photovoltaic and solar-thermal conversion | |||
| (x) Solar power generating systems | |||
| (xi) Solar-photovoltaic panels and modules for water pumping and other applications | |||
| 14. Wind mills and any other specially designed devices that operate on wind mills (installed on or after April 1, 2014) | 80% | ||
| 15. Any special devices including electric pumps and generators operating on wind energy (installed on or after April 1, 2014) | 80% | ||
| 16. Books owned by assessees carrying on a profession | |||
| (i) Books, being annual publications | 100% | ||
| (ii) Books, excluding those covered by entry (i) above | 60% | ||
| (iii) Books owned by assessees carrying on business in running lending libraries | 100% | ||
| Ships | 4(i) | Ocean-going ships including tugs, survey launches, dredgers, barges and other similar ships used primarily for dredging purposes and sighing vessels with wooden hull | |
| 4(ii) | Vessels ordinarily operating on inland waters, not covered by sub-item (iii) below | 20% | |
| 4 (iii) | Vessels ordinarily operating on inland waters being speed boats | 20% |
Part B Intangible Assets:
Patents, know-how, trademarks,franchises,copyrights, licenses or any other commercial or business right of similar nature – 25% is the Depreciation Rate.
7. Example for Depreciation calculation
In 2017-18 Company purchased the following assets –
| Asset Name | Purchase Amt. | Date of Purchase | Depreciation Rate |
| Machine 1 | 500000 | 14-Apr | 15% |
| Furniture | 20000 | 15-Aug | 10% |
| Car | 300000 | 25-Dec | 15% |
| Machine 2 | 40000 | 26-Jan | 15% |
Depreciation will be computed as follows:
| Name of asset | Block 1 | Block 2 | Block 3 |
| Machine – 15% | Furniture – 10% | Car -15% | |
| Opening Value | 0 | 0 | 0 |
| Add-
Purchases (>or = 180 days) Purchase (<180 days) |
500000 40000 |
20000 |
300000 |
| Less-
Sold during the year |
0 |
0 |
0 |
| Closing value of block before depreciation | 540000 | 20000 | 300000 |
| Depreciation | 78000 | 2000 | 22500 |
| (500000*15% + 40000*15%*1/2) | (20000*10%) | (300000*15%*1/2) | |
| Closing WDV after depreciation | 462000 | 18000 | 277500 |
what is the depreciation rate of floorings fixtures
Kindly let know how to classify in IT Act,the expenditure related to a project upto the date of going live / commercial.
sir, if asset purchased after september, please tell me the depreciation method.
sir, if te asset purchased after september how will get the depreciation charged? please tell me.
sir, if the asset purchased after September how will get the depreciation charged? please tell me.
For assets bought from 1-10 of the FY, rates are half of the indicated rate for the item for that FY. From next FY this item is eligible for full rate of Depreciation.
Dear All,
Can any one guide me with the accounting of Accelerated depreciation for solar roof top power plant .
As we are MNRE empaneled bankable EPC contractor in Pune for solar roof top power plant in BOOT model ( Built, Own , Operate and transfer) for industrial and commercial consumer .
Our project is expected to commence by nov 2016. what should be the impact of AD in this financial year and next financial year in investor book.
Regards
Anshuman
09028012464
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what will be the depreciation percentage for automotive Tyre alignment machines?
What will be depreciation on tents used in camping under companies act and incometax act ?
100%
i have a vehicle scooter 10 year old.rate od dep. is 15% and usual life is 10 year. i want to confirm that can i show this vehicle in balane sheet in next year uner fixed / current assets.
Hi Pardeep
The scooter cannot be shown as an asset because an asset is a resource controlled by an enterprise and capable of generating future economic benefits. Since the asset has expired it’s useful life it is not capable of generating any value hence should not be made to appear in balance sheet.
If the asset is still in a working condition , then you can show the value at 5% of the cost and dont take any depreciation on it.
Dear sir what will be the rate of depreciation on new scooter?
Yes