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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

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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.NoAsset

Class

Asset TypeRate of Depreciation
1BuildingResidential buildings not including boarding houses and hotels5%
2BuildingBoarding houses and hotels10%
3BuildingPurely temporary constructions like wooden structures100%
4FurnitureAny fittings / furniture including electrical fittings10%
5Plant and machineryMotor cars excluding those used in a business of running them on hire15%
6Plant and machineryMotor 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 202030%
7Plant and machineryLorries/taxis/motor buses used in a business of running them on hire30%
8Plant and machineryLorries/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 202045%
9Plant and machineryComputers and computer software40%
10Plant and machineryBooks owned by assessee carrying on a profession being annual publications100%
11Plant and machineryBooks owned by assessee carrying on profession not being annual publications60%
12Plant and machineryBooks owned by assessee carrying on business in running lending libraries100%
13Intangible assetsFranchise, trademark, patents, license, copyright, know-how or other commercial or business rights of similar nature25%

6. Depreciation Rates as per the Income Tax Act

Part A Tangible Assets:

Asset ClassSl.NoAsset TypeRate of Depreciation
Building1Buildings used primarily for residential reasons (excluding boarding houses and hotels)5%
2Buildings apart from those used primarily for residential reasons and not covered by subitems 1 (above) and 3 (below)100%
3Buildings 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-IA100%
4Purely temporary erections like wooden structures100%
Furniture and fittingsFurniture and fittings including electrical fittings10%
Plant and machinery1Plant and machinery excluding those covered by sub-items (2), (3) and (8) below15%
2Motor cars, excluding those used in a business of running them on hire, procured or put to use on or after April 1, 199015%
3(i)Aeroplanes, Aero Engines40%
3(ii)Motor taxis, motor buses and motor lorries used in a business of running them on hire30%
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 3240%
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 3260%
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 3260%
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 business50%
3(vii)Moulds used in plastic and rubber goods factories30%
3(viii)Air pollution control equipment

  • Felt
  • filter system
  • Electrostatic precipitation systems
  • Scrubber
  • Counter current / packed bed / venture / cyclonic scrubbers
  • Dust collector systems
  • Evacuation system and ash handling system
100%
3(ix)Water pollution control equipment

  • Aerated detritus chambers (including air compressor)
  • Mechanical screen systems
  • Mechanically skimmed grease and oil removal systems
  • Flash mixing equipment and chemical feed systems
  • Mechanical reactors and mechanical flocculators
  • Mechanically aerated activated sludge / diffused air systems
  • Biofilters
  • Aerated lagoon systems
  • Air floatation systems
  • Methane
  • recovery anaerobic digester systems
  • Steam/air stripping systems
  • Marine outfall systems
  • Urea Hydrolysis systems
  • Activated carbon column
  • Bio
  • Disc or rotating biological contractor
  • Marine outfall systems
  • Ion exchange resin column
  • Centrifuge for dewatering sludge
30%
3(x)(a) Solid waste, control equipment Cryolite / mineral / lime / caustic / chrome recovery system (b) Resource recovery and solid waste recycling systems100%
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) below30%
3(xi)aLife Saving medical equipment

  • D.C Defibrillators for pacemakers and internal use
  • Colour Doppler
  • Haemodialysis
  • Cobalt therapy unit
  • Vascular Angiography System including Digital subtraction Angiography
  • Heart lung machine
  • Spect Gamma Camera
  • Magnetic Resonance Imaging System
  • Ventilator used with anaesthesia apparatus
  • Ventilator except those used with anaesthesia
  • Surgical laser
  • Gamma knife
  • Fibreoptic endoscopes including audit resectoscope/paediatric resectoscope, arthoscope, peritoneoscopes, fibreoptic flexible nasal pharyngo, microaryngoscope, video laryngo, fiberoptic flexible laryngo bronchoscope.
  • Bronchoscope, video oescophago gastroscope, video oescopghago bronchoscope, fibreoptic flexible oesophago gastroscope
40%
4Containers made of plastic or glass used as refills50%
5Computers including computer software60%
6Plant 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, 200450%
7Plant 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-IA100%
81. Wooden parts used in artificial silk manufacturing machinery100%
2. Match factories, wooden match frames
3. Cinematograph films, bulbs of studio lights100%
4. Salt works, condensers, reservoirs, salt pans, etc., made of clayey, sandy or earthy material or any other similar material100%
5. Quarries and mines100%
Sand stowing pipes, winding ropes, tubs and haulage ropes
Safety lamps
6. Flour mills, rollers
7. Sugar works, rollers80%
8. Steel and iron industry, rolling mill rolls80%
9. Energy saving devices80%
(A) Furnaces and specialised boilers
(i) Fluidized bed boilers / ignifluid80%
(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 flows80%
(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 equipment80%
(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 systems80%
(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 equipment80%
(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) Burners80%
(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 equipment80%
(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 valves60%
11. Glass manufacturing concerns, Direct fire glass melting furnaces60%
12. Mineral oil concerns60%
(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 devices60%
(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 publications100%
(ii) Books, excluding those covered by entry (i) above60%
(iii) Books owned by assessees carrying on business in running lending libraries100%
Ships4(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) below20%
4 (iii)Vessels ordinarily operating on inland waters being speed boats20%

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 NamePurchase Amt.Date of PurchaseDepreciation Rate
Machine 150000014-Apr15%
Furniture2000015-Aug10%
Car30000025-Dec15%
Machine 24000026-Jan15%

Depreciation will be computed as follows:

Name of assetBlock 1Block 2Block 3
Machine – 15%Furniture – 10%Car -15%
Opening Value000
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 depreciation54000020000300000
Depreciation78000200022500
(500000*15% + 40000*15%*1/2)(20000*10%)(300000*15%*1/2)
Closing WDV after depreciation46200018000277500

Download Depreciation Rates as per Income Tax Act

Latest Comments

  1. Kindly let know how to classify in IT Act,the expenditure related to a project upto the date of going live / commercial.

    Reply
      • 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.

        Reply
  2. 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

    Reply
  3. 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.

    Reply

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