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June 22, 2020

Latest Depreciation Rates as per Income Tax Act and Companies Act

by Mahesh Mara in Compliance Law, Income Tax

Latest Depreciation Rates as per Income Tax Act and Companies Act

Depreciation on assets is covered under section 32 of the Income tax act. In order to claim depreciation the asset should be used for business or profession and assesse should be owner of such asset. Depreciation on asset is allowed only if assesse is beneficial owner. In case of lease, depreciation is always claimed by lessor whether it is financial lease or operating lease. In case of hire purchase, assesse gets the ownership only after payment of last installment but he can claim depreciation from beginning, assuming assesse is the owner from beginning. Depreciation on asset partially owned by the assesse shall be allowed to him to t extent of his share in asset. In case of stand by machinery and emergency spares, the depreciation shall be allowed even if they are ready for use and not to put use. In this article we will learn about the rates of depreciation on various assets as per Income tax act.

Rates of depreciation as per Income Tax Act:

Below the various rates of depreciation as per Income Tax Act:

Block of assetsDepreciation rate
PART A 
TANGIBLE ASSETS 
I. BUILDING [See Notes 1 to 4 below the Table] 
(1) Buildings which are used mainly for residential purposes except hotels and boarding houses5
(2)  Buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below10
(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 infra- structure facilities under clause (i) of sub-section (4) of section 80IA40
(4)  Purely temporary erections such as wooden structures40
II. FURNITURE AND FITTINGS 
Furniture and fittings including electrical fittings [See Note 5 below the Table]10
III. MACHINERY AND PLANT 
(1)   Machinery and plant other than those covered by sub-items (2), (3) and (8) below : [See Note 5A below the Table]15
(2)   (i) 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 except those covered under entry (ii);15
(ii) Motor cars, other than those used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020.30
(3)  (i) Aeroplanes – Aeroengines40
(ii)  (a) Motor buses, motor lorries and motor taxis used in a business of running them on hire other than those covered under entry (b).30
(b) Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020.45
(iii) Commercial vehicle which is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999 and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below the Table]40
(iv)  New commercial vehicle which is acquired on or after the 1st day of October, 1998, but before the 1st day of April, 1999 in replacement of condemned vehicle of over 15 years of age and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below the Table]40
(v)  New commercial vehicle which is acquired on or after the 1st day of April, 1999 but before the 1st day of April, 2000 in replacement of condemned vehicle of over 15 years of age and is put to use before the 1st day of 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 [See Note 6 below the Table]40
(vi)  New commercial vehicle which is acquired on or after the 1st day of April, 2001 but before the 1st day of April, 2002 and is put to use before the 1st day of April, 2002 for the purposes of business or profession [See Note 6 below the Table]40
(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of October, 2009 and is put to use before the 1st day of October, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table]40
(vii)  Moulds used in rubber and plastic goods factories30
(viii)  Air pollution control equipment, being— 
(a)  Electrostatic precipitation systems 
(b)  Felt-filter systems 
(c)  Dust collector systems40
(d)  Scrubber-counter current/venturi/packed bed/cyclonic scrubbers 
(e)  Ash handling system and evacuation system 
(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 systems40
(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 
(x) (a) Solidwaste control equipments being – caustic/lime/chrome/mineral/cryolite recovery systems40
(b)  Solidwaste recycling and resource recovery systems
(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) below30
(xia) Life saving medical equipment, being— 
(a)  D.C. Defibrillators for internal use and pace makers 
(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]40
(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) 
(4)  Containers made of glass or plastic used as re-fills40
(5)  Computers including computer software [See note 7 below the Table]40
(6)  Machinery and plant, used in weaving, processing and garment sector of textile industry, which is purchased under TUFS on or after the 1st day of April, 2001 but before the 1st day of April, 2004 and is put to use before the 1st day of April, 2004 [See Note 8 below the Table]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 [See Notes 4 and 9 below the Table]40
(8)  (i) Wooden parts used in artificial silk manufacturing machinery40
(ii)  Cinematograph films – bulbs of studio lights40
(iii)  Match factories – Wooden match frames40
(iv)  Mines and quarries : 
(a)  Tubs, winding ropes, haulage ropes and sand stowing pipes40
(b)  Safety lamps
(v)  Salt works – Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clayey material or any other similar material40
(vi)  Flour mills – Rollers40
(vii)  Iron and steel industry – Rolling mill rolls40
(viii)  Sugar works – Rollers40
(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 furnaces40
(d)  High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers) 
B. Instrumentation and monitoring system for monitoring energy flows: 
(a)  Automatic electrical load monitoring systems 
(b)  Digital heat loss meters 
(c)  Micro-processor based control systems 
(d)  Infra-red thermography40
(e)  Meters for measuring heat losses, furnace oil flow, steam flow, electric energy and power factor meters 
(f)  Maximum demand indicator and clamp on power meters 
(g)  Exhaust gases analyser 
(h)  Fuel oil pump test bench 
C. Waste heat recovery equipment: 
(a)  Economisers and feed water heaters 
(b)  Recuperators and air pre-heaters40
(c)  Heat pumps 
(d)  Thermal energy wheel for high and low temperature waste heat recovery 
D. Co-generation systems: 
(a)  Back pressure pass out, controlled extraction, extraction-cum-condensing turbines for co-generation along with pressure boilers40
(b)  Vapour absorption refrigeration systems 
(c)  Organic rankine cycle power systems 
(d)  Low inlet pressure small steam turbines 
E. Electrical equipment: 
(a)  Shunt capacitors and synchronous condenser systems 
(b)  Automatic power cut off devices (relays) mounted on individual motors 
(c)  Automatic voltage controller 
(d)  Power factor controller for AC motors 
(e)  Solid state devices for controlling motor speeds 
(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 equipment40
(i)  Time of Day (ToD) energy meters 
(j)  Equipment to establish transmission highways for National Power Grid to facilitate transfer of surplus power of one region to the deficient region 
(k)  Remote terminal units/intelligent electronic devices, computer hardware/software, router/bridges, 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) 
F. Burners: 
(a)  0 to 10 per cent excess air burners 
(b)  Emulsion burners40
(c)  Burners using air with high pre-heat temperature (above 300°C) 
G. Other equipment: 
(a)  Wet air oxidation equipment for recovery of chemicals and heat 
(b)  Mechanical vapour recompressors 
(c)  Thin film evaporators 
(d)  Automatic micro-processor based load demand controllers40
(e)  Coal based producer gas plants 
(f)  Fluid drives and fluid couplings 
(g)  Turbo charges/super-charges 
(h)  Sealed radiation sources for radiation processing plants 
(x) Gas cylinders including valves and regulators40
(xi)  Glass manufacturing concerns – Direct fire glass melting furnaces40
(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 concerns40
(c)  Oil wells not covered in clauses (a) and (b) (with effect from the assessment year 2016-17)15
(xiii)  Renewal energy devices being— 
(a)  Flat plate solar collectors 
(b)  Concentrating and pipe type solar collectors 
(c)  Solar cookers 
(d)  Solar water heaters and systems 
(e)  Air/gas/fluid heating systems 
(f)  Solar crop driers and systems 
(g)  Solar refrigeration, cold storages and air-conditioning systems 
(h)  Solar steels and desalination systems 
(i)  Solar power generating systems 
(j)  Solar pumps based on solar-thermal and solar-photovoltaic conversion 
(k)  Solar-photovoltaic modules and panels for water pumping and other applications40
(l)  Windmills and any specially designed devices which run on wind-mills installed on or before March 31, 2012 
(m)  Any special devices including electric generators and pumps running on wind energy installed on or before March 31, 2012 
(n)  Biogas plant and biogas engines 
(o)  Electrically operated vehicles including battery powered or fuel-cell powered vehicles 
(p)  Agricultural and municipal waste conversion devices producing energy 
(q)  Equipment for utilising ocean waste and thermal energy 
(r)  Machinery and plant used in the manufacture of any of the above sub-items 
(9)  (i) Books owned by assessees carrying on a profession— 
(a)  Books, being annual publications40
(b)  Books, other than those covered by entry (a) above40
(ii)  Books owned by assessees carrying on business in running lending libraries40
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 hull20
(2)  Vessels ordinarily operating on inland waters, not covered by sub-item (3) below20
(3)  Vessels ordinarily operating on inland waters being speed boats [See Note 10 below the Table]20
PART B 
INTANGIBLE ASSETS 
Know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature25

Notes:

  1. “Buildings” include roads, bridges, culverts, wells and tubewells.

 2. A building shall be deemed to be a building used mainly for residential purposes, if the built-up floor area thereof used for residential purposes is not less than sixty-six and two-third per cent of its total built-up floor area and shall include any such building in the factory premises.

 3. In respect of any structure or work by way of renovation or improvement in or in relation to a building referred to in Explanation 1 of clause (ii) of sub-section (1) of section 32, the percentage to be applied will be the percentage specified against sub-item (1) or (2) of item I as may be appropriate to the class of building in or in relation to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to be applied would be such percentage as would be appropriate, as if the structure or work constituted a separate building.

 4. Water treatment system includes system for desalination, demineralization and purification of water.

 5. “Electrical fittings” include electrical wiring, switches, sockets, other fittings and fans, etc.

5A. Rate of depreciation shall be 40% if conditions of Rule 5(2) are satisfied.

5B. Applicable from the Assessment year 2004-05.

 6. “Commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”. The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

 7. “Computer software” means any computer programme recorded on any disc, tape, perforated media or other information storage device.

 8. “TUFS” means Technology Upgradation Fund Scheme announced by the Government of India in the form of a Resolution of the Ministry of Textiles vide No. 28/1/99-CTI of 31-3-1999.

 9. Machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from the plant to the storage facility.

10. “Speed boat” means a motor boat driven by a high speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometers per hour in still water and so designed that when running at a speed, it will plane, i.e., its bow will rise from the water.

Rate of depreciation as per Companies Act

Below the various rates of depreciation as per Companies Act:

Nature of AssetsUseful
Life
Rate as per
SLM
Rate as per
WDV
(I) Buildings [NESD]
(a) Building (other than factory buildings) RCC Frame Structure601.58%4.87%
(b) Building (other than factory buildings) other than RCC
Frame Structure
303.17%9.50%
(c) Factory buildings303.17%9.50%
(d) Fences, wells, tube wells519.00%45.07%
(e) Other (including temporary structure, etc.)331.67%63.16%
(II) Bridges, culverts, bunkers, etc. [NESD]303.17%9.50%
(III) Roads [NESD]
(a) Carpeted Roads
(i) Carpeted Roads – RCC109.50%25.89%
(ii) Carpeted Roads – other than RCC519.00%45.07%
(b) Non-carpeted roads331.67%63.16%
(IV) Plant and Machinery
(a) General rate applicable to Plant and Machinery not
covered under Special Plant and Machinery
(i) Plant and Machinery other than continuous process plant not
covered under specific
156.33%18.10%
(ii) Continuous process plant for which no special rate has been
prescribed under (ii) below
811.88%31.23%
(b) Special Plant and Machinery
(i) Plant and Machinery related to production and exhibition
of Motion Picture Films
1 Cinematograph films – Machinery used in the production and
exhibition of cinematograph films, recording and reproducing
equipments, developing machines, printing machines, editing
machines, synchronizers and studio lights
137.31%20.58%
2 Projecting equipment for exhibition of films137.31%20.58%
(ii) Plant and Machinery used in glass
1 Plant and Machinery except direct fire glass melting furnaces
– Recuperative and regenerative glass melting furnaces
137.31%20.58%
2 Plant and Machinery except direct fire glass melting furnaces
– Moulds [NESD]
811.88%31.23%
3 Float Glass Melting Furnaces [NESD]109.50%25.89%
(iii) Plant and Machinery used in mines and quarries Portable
underground machinery and earth moving machinery used in
open cast mining
811.88%31.23%
(iv) Plant and Machinery used in Telecommunications [NESD]
1 Towers185.28%15.33%
2 Telecom transceivers, switching centers, transmission and
other network equipment
137.31%20.58%
3 Telecom – Ducts, Cables and optical fiber185.28%15.33%
4 Satellites185.28%15.33%
(v) Plant and Machinery used in exploration, production and
refining oil and gas [NESD]
1 Refineries253.80%11.29%
2 Oil and gas assets (including wells), processing plant and
facilities
253.80%11.29%
3 Petrochemical Plant253.80%11.29%
4 Storage tanks and related equipment253.80%11.29%
5 Pipelines303.17%9.50%
6 Drilling Rig303.17%9.50%
7 Field operations (above ground) Portable boilers, drilling tools,
well-head tanks, etc.
811.88%31.23%
8 Loggers811.88%31.23%
(vi) Plant and Machinery used in generation, transmission and
distribution of power [NESD]
1 Thermal / Gas / Combined Cycle Power Generation Plant402.38%7.22%
2 Hydro Power Generation Plant402.38%7.22%
3 Nuclear Power Generation Plant402.38%7.22%
4 Transmission lines, cables and other network assets402.38%7.22%
5 Wind Power Generation Plant224.32%12.73%
6 Electric Distribution Plant352.71%8.20%
7 Gas Storage and Distribution Plant303.17%9.50%
8 Water Distribution Plant including pipelines303.17%9.50%
(vii) Plant and Machinery used in manufacture of
1 Sinter Plant204.75%13.91%
2 Blast Furnace204.75%13.91%
3 Coke Ovens204.75%13.91%
4 Rolling mill in steel plant204.75%13.91%
5 Basic Oxygen Furnace Converter253.80%11.29%
(viii) Plant and Machinery used in manufacture of nonferrous metals
1 Metal pot line [NESD]402.38%7.22%
2 Bauxite crushing and grinding section402.38%7.22%
3 Digester Section [NESD]402.38%7.22%
4 Turbine [NESD]402.38%7.22%
5 Equipments for Calcinations [NESD]402.38%7.22%
6 Copper Smelter [NESD]402.38%7.22%
7 Roll Grinder402.38%7.22%
8 Soaking Pit303.17%9.50%
9 Annealing Furnace303.17%9.50%
10 Rolling Mills303.17%9.50%
11 Equipments for Scalping, Slitting, etc. [NSED]303.17%9.50%
12 Surface Miner, Ripper Dozer, etc. used in mines253.80%11.29%
13 Copper refining plant [NSED]253.80%11.29%
(ix) Plant and Machinery used in medical and surgical operations
[NESD]
1 Electrical Machinery, X-ray and electrotherapeutic apparatus
and accessories thereto, medical, diagnostic equipments, namely,
Cat-scan, Ultrasound Machines, ECG Monitors, etc.
137.31%20.58%
2 Other Equipments156.33%18.10%
(x) Plant and Machinery used in manufacture of pharmaceuticals
and chemicals [NESD]
1 Reactors204.75%13.91%
2 Distillation Columns204.75%13.91%
3 Drying equipments / Centrifuges and Decanters204.75%13.91%
4 Vessel / Storage tanks204.75%13.91%
(xi) Plant and Machinery used in civil construction
1 Concreting, Crushing, Piling Equipments and Road Making
Equipments
127.92%22.09%
2 Heavy Lift Equipments –
– Cranes with capacity more than 100 tons204.75%13.91%
– Cranes with capacity less than 100 tons156.33%18.10%
3 Transmission line, Tunneling Equipments [NESD]109.50%25.89%
4 Earth-moving equipments910.56%28.31%
5 Others including Material Handling / Pipeline / Welding
Equipments [NESD]
127.92%22.09%
(xii) Plant and Machinery used in salt works [NESD]156.33%18.10%
(V) Furniture and fittings [NESD]
(a) General furniture and fittings109.50%25.89%
(b) Furniture and fittings used in hotels, restaurants and boarding
houses, schools, colleges and other education institutions, libraries,
welfare centers, meeting halls, cinema houses, theatres and
circuses and furniture and fittings let out on hire for used on
occasion of marriages and similar functions
811.88%31.23%
(VI) Motor Vehicles [NESD]
(a) Motor cycles, scooters and other mopeds109.50%25.89%
(b) Motor buses, motor lorries, motor cars and motor taxies
used in a business of running them on hire
615.83%39.30%
(c) Motor buses, motor lorries, motor cars and motor taxies
other than those used in a business of running them on
811.88%31.23%
(d) Motor tractors, harvesting combines and heavy vehicles811.88%31.23%
(e) Electrically operated vehicles811.88%31.23%
(VII) Ships [NESD]
(a) Ocean-going ships
(i) Bulk Carriers and liner vessels253.80%11.29%
(ii) Crude tankers, product carriers and easy chemical carriers
with or without conventional
204.75%13.91%
(iii) Chemicals and Acid Carriers
1 With Stainless steel tanks253.80%11.29%
2 With other tanks204.75%13.91%
(iv) Liquefied gas carriers303.17%9.50%
(v) Conventional large passenger vessels which are used for
cruise purpose also
303.17%9.50%
(vi) Coastal service ships of all categories303.17%9.50%
(vii) Offshore supply and support vessels204.75%13.91%
(viii) Catamarans and other high speed passenger
for ships or boats
204.75%13.91%
(ix) Drill ships253.80%11.29%
(x) Hovercrafts156.33%18.10%
(xi) Fishing vessels with wooden hull109.50%25.89%
(xii) Dredgers, tugs, barges, survey launches and other
similar ships used mainly for dredging
146.79%19.26%
(b) Vessels ordinarily operating on inland waters
(i) Speed boats137.31%20.58%
(ii) Other vessels283.39%10.15%
(VIII) Aircrafts or Helicopters [NESD]204.75%13.91%
(IX) Railway siding, locomotives, rolling stocks,
tramways and railway used by concerns, excluding railway
156.33%18.10%
(X) Ropeway structures [NESD]156.33%18.10%
(XI) Office equipments [NESD]519.00%45.07%
(XII) Computers and data processing units [NESD]
(a) Servers and networks615.83%39.30%
(b) End user devices, such as, desktops, laptops, etc.331.67%63.16%
(XIII) Laboratory equipment [NESD]
(a) General laboratory equipment109.50%25.89%
(b) Laboratory equipments used in education institutions519.00

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