Depreciation refers to the reduction in the value of a fixed asset as a result of its normal usage and wear and tear. Knowledge of depreciation is essential for writing off the asset's cost against profit over its life.
Under the Income Tax Act, depreciation is charged against income. There are varying techniques of assessing it, such as straight-line method or written down value method (WDV). The Act recognizes WDV method of depreciating asset, except for establishments involved in generation and/or distribution of power.
| Block of Assets | AY 2018-19 onwards (Depreciation allowance as percentage of WDV) |
|---|---|
| PART A | |
| I. BUILDING | |
| (1) Buildings primarily used for residential purposes other than hotels and boarding houses | 5 |
| (2) Buildings other than those primarily used for residential purposes and not covered by sub-items (1) above and (3) below | 10 |
| (3) Buildings acquired on or after the 1st day of September, 2002 for installing machinery and plant forming part of water supply project or water treatment system and which is put to use for the purpose of business of providing infrastructure facilities under clause (i) of sub-section (4) of section 80-IA | 40 |
| Section 10(5) | Leave Travel Concession |
| (4) Purely temporary erections | 40 |
| II. FURNITURE AND FITTINGS | |
| Furniture and fittings including electrical fittings | 10 |
| III. MACHINERY AND PLANT | |
| (1) Machinery and plant other than those covered by sub-items (2), (3) and (8) below | 15 |
| (2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April, 1990 | 15 |
| (3) (i) Aeroplanes – Aeroengines | 40 |
| (ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire | 30 |
| (iii) Commercial vehicle acquired by the assessee on or after 1st October, 1998, but before the 1st April, 1999 and is put to use for any period before the 1st April, 1999 for the purposes of business or profession as per the third proviso to clause (ii) of sub-section (1) of section 32 | 40 |
| (iv) New commercial vehicle acquired on or after 1 October, 1998, but before 1st April, 1999 in replacement of condemned vehicle of over 15 years of age and is put to use for any period before 1 April, 1999 for the purposes of business or profession as per the third proviso to clause (ii) of sub-section (1) of section 32 | 40 |
| (v) New commercial vehicle acquired on or after 1st April, 1999 but before 1st April, 2000 in replacement of condemned vehicle of over 15 years of age and is put to use before the 1st April, 2000 for the purposes of business or profession in accordance with the second proviso to clause (ii) of sub-section (1) of section 32 | 40 |
| (vi) New commercial vehicle acquired on or after 1 April, 2001 but before 1 April, 2002 and is put to use before 1 April, 2002 for the purposes of business or profession | 40 |
| via) New commercial vehicle acquired on or after 1st January, 2009 but before the 1st October, 2009 and is put to use before 1st October, 2009 for the purposes of business or profession | 40 |
| (vii) Moulds used in rubber and plastic goods factories | 30 |
| (viii) Air pollution control equipment, being— (a) Electrostatic precipitation systems (b) Felt-filter systems (c) Dust collector systems (d) Scrubber-counter current/venturi/packed bed/cyclonic scrubbers (e) Ash handling system and evacuation system |
40 |
| (ix) Water pollution control equipment, being— (a) Mechanical screen systems (b) Aerated detritus chambers (including air compressor) (c) Mechanically skimmed oil and grease removal systems (d) Chemical feed systems and flash mixing equipment (e) Mechanical flocculators and mechanical reactors (f) Diffused air/mechanically aerated activated sludge systems (g) Aerated lagoon systems (h) Biofilters (i) Methane-recovery anaerobic digester systems (j) Air floatation systems (k) Air/steam stripping systems (l) Urea Hydrolysis systems (m) Marine outfall systems (n) Centrifuge for dewatering sludge (o) Rotating biological contractor or bio-disc (p) Ion exchange resin column (q) Activated carbon column |
40 |
| (x) (a) Solidwaste control equipments being - caustic/lime/chrome/mineral/cryolite recovery systems (b) Solidwaste recycling and resource recovery systems | 40 |
| (xi) Machinery and plant, used in semi-conductor industry covering all integrated circuits (ICs) (excluding hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration/very large-scale integration (LSI/VLSI) as also discrete semi-conductor devices such as diodes, transistors, thyristors, triacs, etc., other than those covered by entries (viii), (ix) and (x) of this sub-item and sub-item (8) below | 30 |
| (xia) Life-saving medical equipment, being— (a) D.C. Defibrillators for internal use and pacemakers (b) Haemodialysors (c) Heart lung machine (d) Cobalt Therapy Unit (e) Colour Doppler (f) SPECT Gamma Camera (g) Vascular Angiography System including Digital subtraction Angiography (h) Ventilator used with anaesthesia apparatus (i) Magnetic Resonance Imaging System (j) Surgical Laser [See Note 5B] (k) Ventilators other than those used with anaesthesia (l) Gamma knife (m) Bone Marrow Transplant Equipment including silastic long standing intravenous catheters for chemotherapy (n) Fibreoptic endoscopes including Paediatric resectoscope/audit resectoscope, Peritoneoscopes, Arthoscope, Microlaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope (o) Laparoscope (single incision) |
40 |
| (4) Containers made of glass or plastic used as re-fills | 40 |
| (5) Computers including computer software | 40 |
| (6) Machinery and plant, used in weaving, processing and garment sector of textile industry, which is purchased under TUFS on or after 1st April, 2001 but before 1st April, 2004 and is put to use before 1st April, 2004 | 40 |
| (7) Machinery and plant, acquired and installed on or after the 1st day of September, 2002 in a water supply project or a water treatment system and which is put to use for the purpose of business of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA | 40 |
| (8) (i) Wooden parts used in artificial silk manufacturing machinery | 40 |
| (ii) Cinematograph films - bulbs of studio lights | 40 |
| (iii) Match factories - Wooden match frames | 40 |
| (iv) Mines and quarries: (a) Tubs, winding ropes, haulage ropes and sand stowing pipes (b) Safety lamps | 40 |
| (v) Salt works - Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clayey material or any other similar material | 40 |
| (vi) Flour mills – Rollers | 40 |
| (vii) Iron and steel industry - Rolling mill rolls | 40 |
| (viii) Sugar works – Rollers | 40 |
| (ix) Energy saving devices, being | |
| A. Specialised boilers and furnaces: (a) Ignifluid/fluidized bed boilers (b) Flameless furnaces and continuous pusher type furnaces (c) Fluidized bed type heat treatment furnaces (d) High efficiency boilers (thermal efficiency higher than 75% for coal fired and 80% for oil/gas fired boilers) |
40 |
| B. Instrumentation and monitoring system for monitoring energy flows: (a) Automatic electrical load monitoring systems (b) Digital heat loss meters (c) Meters for measuring heat losses, furnace oil flow, steam flow, electric energy and power factor meters (d) Micro-processor based control systems (e) Infrared thermography (f) Maximum demand indicator and clamp on power meters (g) Exhaust gases analyser (h) Fuel oil pump test bench |
40 |
| C. Waste heat recovery equipment: (a) Economisers and feed water heaters (b) Recuperators and air pre-heaters (c) Heat pumps (d) Thermal energy wheel for high and low temperature waste heat recovery |
40 |
| D. Co-generation systems: (a) Back pressure pass out, controlled extraction, extraction-cum-condensing turbines for co-generation along with pressure boilers (b) Organic rankine cycle power systems (c) Vapour absorption refrigeration systems (d) Low inlet pressure small steam turbines |
40 |
| E. Electrical equipment: (a) Shunt capacitors and synchronous condenser systems (b) Power factor controller for AC motors (c) Solid state devices for controlling motor speeds (d) Automatic power cut off devices (relays) mounted on individual motors (e) Automatic voltage controller (f) Thermally energy-efficient stenters (which require 800 or less kilocalories of heat to evaporate one kilogram of water) (g) Series compensation equipment (h) Flexible AC Transmission (FACT) devices - Thyristor controlled series compensation equipment (i) Time of Day (ToD) energy meters (j) Equipment to set up transmission highways for National Power Grid to allow transfer of surplus power of one region to the deficient region (k) Remote terminal units/intelligent electronic devices, router/bridges, computer hardware/software, other required equipment and associated communication systems for supervisory control and data acquisition systems, energy management systems and distribution management systems for power transmission systems (l) Special energy meters for Availability Based Tariff (ABT) |
40 |
| F. Burners: (a) Emulsion burners (b) 0 to 10% excess air burners (c) Burners using air with high pre-heat temperature (above 300°C) |
40 |
| G. Other equipment: (a) Wet air oxidation equipment for recovery of chemicals and heat (b) Mechanical vapour recompressors (c) Fluid drives and fluid couplings (d) Thin film evaporators (e) Automatic micro-processor based load demand controllers (f) Coal based producer gas plants (g) Turbo charges/super-charges (h) Sealed radiation sources for radiation processing plants |
40 |
| (x) Gas cylinders including valves and regulators | 40 |
| (xi) Glass manufacturing concerns - Direct fire glass melting furnaces | 40 |
| (xii) Mineral oil concerns: (a) Plant used in field operations (above ground) distribution - Returnable packages (b) Plant used in field operations (below ground), but not including kerbside pumps including underground tanks and fittings used in field operations (distribution) by mineral oil concerns (c) Oil wells not covered in clauses (a) and (b) (from AY 016-17) |
40 |
| (xiii) Renewal energy devices being— (a) Flat plate solar collectors (b) Concentrating and pipe type solar collectors (c) Solar cookers (d) Cold storages, Solar refrigeration and air-conditioning systems (e) Solar steels and desalination systems (f) Solar power generating systems (g) Solar water heaters and systems (h) Gas/air/fluid heating systems (i) Solar crop driers and systems (j) Solar pumps based on solar-thermal and solar-photovoltaic conversion (k) Solar-photovoltaic modules and panels for water pumping and other applications (l) Windmills and any specially designed devices that run on wind-mills installed on or prior to March 31, 2012 (m) Any special devices including electric generators and pumps running on wind energy installed on or prior to March 31, 2012 (n) Biogas plant and biogas engines (o) Electrically operated vehicles (p) Agricultural and municipal waste conversion devices producing energy (q) Equipment for utilising ocean waste and thermal energy (r) Machinery and plant used to manufacture any of the above sub-items |
40 |
| (9) (i) Books owned by assessees carrying on a profession— (a) Books, being annual publications (b) Books, other than those covered by entry (a) above (ii) Books owned by assessees carrying on business in running lending libraries |
40 |
| IV. SHIPS | |
| (1) Ocean-going ships including dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels with wooden hull (2) Vessels ordinarily operating on inland waters, not covered by sub-item (3) below (3) Vessels ordinarily operating on inland waters being speed boats |
20 |
| PART B | |
| INTANGIBLE ASSETS | |
| Know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature | 25 |
