DEPRECIATION

INCOME TAXLAW AND PRACTICE

(INDIA)

What is Depreciation?

Gradual decrease in the value of asset

Charged out ofProfits and Gains of Business

Income from other Sources

Types of Asset

Tangible Asset

Building

Non-Factory

Factory

Priority

Temporary structures

Plant Machinery Furniture

Intangible Asset

Patents, Copyright, Know-how, License,

Trademarks

Conditions

• Charge on Capital Assets

• Block of Asset

• Owned by the assessee

• Used for business purpose only

• No depreciation in the year of sale

• Allowed on the basis of Written-down value of

the asset

Usage of Asset :

New asset acquired during previous year 2015-16 and used for more than 180 days

Full year depreciation

New asset acquired during previous year 2015-16 and used for less than 180 days

Half year depreciation

Asset acquired in any other previous year but put to use in 2015-16

Full year depreciation

Asset not at all used in the relevant previous year No depreciation

Block of AssetNo. Rate Assets

A. Intangible Assets

1. 25% Know-how, patents, copyright, Trademark, license etc.

B. Tangible Assets

Group-I : Buildings

2. 5% Buildings used for Residential purpose

3. 10% Non-Residential buildings

4. 100% • Buildings acquired on/after 01.09.2002 for installation of water supply/treatment project machines used for business purpose

• Temporary structures like wooden structures

Group-II : Furniture

5. 10% All furniture including electric fittings

No. Rate Assets

Group-III : Plant and Machinery

6. 15% • Plant and machinery• Motor car, scooter, truck, bus, motor cycle• Air conditioner• Surgical equipment

7. 20% Inland vessels and ocean going ships

8. 30% • Bus, taxi, lorry used in business of running them on hire• Mould used in rubber and plastic industry• Machines used in semi-conductor industry

9. 40% • Aircrafts and Aero engines• Life saving medical equipment

10. 50% • Glass and plastic containers used as refills• Textile machinery acquired under Technology Up-gradation Fund scheme

during 1.4.2001-31.3.200411. 60% • Computers and books(other than annual publications) for professional use

• Gas cylinder, furnaces, burner etc.• Mineral oil concerns

12. 80% Energy saving devices

13. 100% • Pollution control equipment for air, water etc.• Books in case of library business• Books being annual publication

Computation of Depreciation

Depreciation is calculated on the Written-Down Value of the asset

Written-down value is calculated as:

Aggregate of written-down value of asset of the same block

Add : Actual cost of asset bought/acquired during the previous year

Less : Money received on the sale of an asset of the same block

WRITTEN-DOWN VALUE OF THE ASSET

X X X

X X X

X X X

X X X

Depreciation= WDV x Rate of

depreciation

Additional DepreciationThe conditions for Additional depreciation are:• Allowed @ 20% for Plant and Machinery only• P&M is acquired and installed on/after 1.4.2005 =

applicable• P&M is acquired before 1.4.2005 and installed later = not

applicable• Charged in addition to normal depreciation• Plant and/or Machinery should be unused• Does not include office appliances or road transport

vehicle• Condition of usage applicable

THANK YOU!

Presented by:

BHARTI GOYAL D.II B.COM [CA]