Depreciation
Schedule II useful lives beside Income Tax Act block rates, on the same asset, so the two answers can be read together.
Schedule II, Part C.
Appendix I to the Income-tax Rules.
Blank if this asset is the whole block.
20% of cost on new plant and machinery in manufacturing. Not available under 115BAA or 115BAB.
Companies Act, Schedule II
₹58,127.85
| Cost | ₹10,00,000.00 |
|---|---|
| Residual valueCapped at 5% of cost by Schedule II. | ₹50,000.00 |
| RateCost less residual, over 15 years. | 6.3333% |
| A full year | ₹63,333.33 |
| Days heldPro-rated by days, not by months. | 335 of 365 |
| Depreciation for the year | ₹58,127.85 |
| Closing book value | ₹9,41,872.15 |
Income Tax Act, block of assets
₹1,50,000.00
| On the addition at 15%Used 335 days. | ₹1,50,000.00 |
|---|---|
| Depreciation for the year | ₹1,50,000.00 |
| Closing WDV of the block | ₹8,50,000.00 |
The two figures answer different questions and are not meant to agree. Schedule II charges this asset over its life; the Act charges the block at a fixed rate.
How this worksShow
Two Acts that are not two methods
These are not the same calculation done twice. Schedule II depreciates an individual asset over a useful life, down to a residual value of at most 5% of cost, pro-rated by the days it was held. The Income Tax Act depreciates a block of assets at a prescribed rate, with no residual value at all and a half-year rule in the year of acquisition.
So the two figures differ, often by a factor of two or three, and neither is wrong. Plant costing ten lakh takes ₹63,333 of depreciation in the accounts and ₹1,50,000 in the tax computation, and the gap is a deferred tax entry rather than an error to be found.
Schedule II
On the straight line the residual comes off before dividing, not after. On the written down value there is no rate to look up: the rate is whatever reduces cost to the residual over the life, so a fifteen-year asset carries 18.1036% and a three-year one carries 63.16%. This page derives it, which means a change of life cannot leave a stale rate behind it.
| Rule | Figure | Statutory basis |
|---|---|---|
| Residual value | up to 5% of cost | Schedule II, note 5, Companies Act 2013 |
| Straight line | (cost − residual) ÷ life | Schedule II, Part C, Companies Act 2013 |
| Written down value | 1 − (residual ÷ cost)^(1÷life) | Schedule II, Part C, Companies Act 2013 |
| Part of a year | pro rata by days | Schedule II, note 2, Companies Act 2013 |
| Buildings — RCC frame | 60 years | Schedule II, Part C, Companies Act 2013 |
| Buildings — other than RCC frame | 30 years | Schedule II, Part C, Companies Act 2013 |
| Factory buildings | 30 years | Schedule II, Part C, Companies Act 2013 |
| Plant and machinery — general | 15 years | Schedule II, Part C, Companies Act 2013 |
| Electrical installations and equipment | 10 years | Schedule II, Part C, Companies Act 2013 |
| Furniture and fittings | 10 years | Schedule II, Part C, Companies Act 2013 |
| Laboratory equipment | 10 years | Schedule II, Part C, Companies Act 2013 |
| Motor vehicles — not used for hire | 8 years | Schedule II, Part C, Companies Act 2013 |
| Motor buses and lorries used in a hire business | 6 years | Schedule II, Part C, Companies Act 2013 |
| Computers — servers and networks | 6 years | Schedule II, Part C, Companies Act 2013 |
| Office equipment | 5 years | Schedule II, Part C, Companies Act 2013 |
| Fences, wells and tube wells | 5 years | Schedule II, Part C, Companies Act 2013 |
| Computers — end-user devices | 3 years | Schedule II, Part C, Companies Act 2013 |
The Income Tax Act, and the 180-day line
An asset put to use for fewer than 180 days in the year it was acquired gets half the rate. The rule reads “less than”, so an asset used for exactly 180 days gets the whole of it — which is the boundary most often got wrong, and it is worth checking against a calendar rather than counting months.
- The halving applies only to the addition. Opening written down value always carries the full rate, whatever date those assets arrived.
- Additional depreciation of 20% is available on new plant and machinery in manufacturing — and not to a company that has elected 115BAA or 115BAB. The regime is therefore an input to a depreciation calculation.
- Where the addition is late in the year, the additional depreciation halves too and the other half is allowed the following year.
- When a block ceases to exist, no depreciation is allowed at all and the difference falls under section 50 as a short term capital gain or loss.
| Rule | Figure | Statutory basis |
|---|---|---|
| Method | WDV on the block | s.32(1)(ii), Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Under 180 days in the year of acquisition | half the rate | Second proviso to s.32(1), Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Additional depreciation | 20% of cost | s.32(1)(iia), Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Block ceases to exist | no depreciation | s.50, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Buildings — residential | 5% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Buildings — other than residential | 10% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Buildings — purely temporary structures | 40% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Furniture and fittings | 10% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Plant and machinery — general | 15% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Motor cars | 15% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Ships | 20% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Intangible assets | 25% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Computers, including software | 40% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
| Aeroplanes and aero engines | 40% | Appendix I, Income-tax Rules 1962, Income-tax Act 1961; corresponding provision, Income-tax Act 2025 to be confirmed |
Rates and thresholds as at 10 September 2026. This page is an estimate, not professional advice, and it is not a filing.
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