Free Online Depreciation Calculator
Calculate asset depreciation using Straight Line (SLM) and Written Down Value (WDV) methods. Get year-wise schedule with official Income Tax and Companies Act rates.
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Select an asset type and enter the cost to calculateHow Depreciation Calculation Works in India
Depreciation represents the decrease in value of an asset over its useful life. Every business that owns tangible or intangible assets must account for depreciation in its financial statements and tax computation. India follows two primary frameworks for depreciation: the Income Tax Act 1961 and the Companies Act 2013, each with distinct methods and rates.
This calculator supports both the Written Down Value (WDV) method used for income tax computation and the Straight Line Method (SLM) used under the Companies Act. Select your asset type, enter the cost, and get an instant year-wise depreciation schedule along with the cumulative impact on your taxes.
Written Down Value (WDV) Method
The WDV method charges depreciation on the reducing balance of the asset. It results in higher depreciation in the earlier years and progressively lower amounts as the asset ages. This method is mandatory for computing depreciation under the Income Tax Act 1961.
- Year 1 Depreciation = Cost of Asset x WDV Rate
- Year 2 Depreciation = (Cost minus Year 1 Depreciation) x WDV Rate
- Each subsequent year applies the rate to the remaining book value
- Common WDV rates: 10% (Buildings), 15% (General P&M), 40% (Computers), 25% (Intangibles)
Straight Line Method (SLM)
The SLM charges an equal amount of depreciation every year throughout the useful life of the asset. This method is prescribed under Schedule II of the Companies Act 2013 and provides a consistent expense allocation.
- Annual Depreciation = (Cost minus Residual Value) / Useful Life in Years
- Residual value is capped at 5% of the original cost (Companies Act 2013)
- Produces uniform depreciation charge year after year
- Useful lives range from 3 years (Computers) to 60 years (Residential Buildings)
Depreciation Rate Chart (FY 2025-26)
Below are the commonly used depreciation rates under both the Income Tax Act and the Companies Act 2013. Select the exact asset type in the calculator above for the precise rate applicable to your specific asset.
| Asset | WDV Rate (IT Act) | SLM Rate (Co. Act) | Useful Life |
|---|---|---|---|
| Residential Buildings | 10% | 1.58% | 60 years |
| Commercial Buildings | 10% | 3.17% | 30 years |
| Furniture & Fittings | 10% | 9.50% | 10 years |
| General Plant & Machinery | 15% | 6.33% | 15 years |
| Motor Cars | 15% | 11.88% | 8 years |
| Computers & Software | 40% | 31.67% | 3 years |
| Office Equipment | 15% | 19.00% | 5 years |
| Renewable Energy Devices | 40% | 4.32% | 22 years |
| Patents & Copyrights | 25% | 9.50% | 10 years |
| Ships & Vessels | 20% | 4.75% | 20 years |
Understanding the Half-Year Rule
One of the most important provisions in income tax depreciation is the half-year rule. Under Section 32 of the Income Tax Act, if an asset is put to use for less than 180 days during the financial year of acquisition, only 50% of the normal depreciation rate is allowed for that first year. This provision prevents taxpayers from claiming full-year depreciation on assets purchased towards the end of the year.
For example, if you purchase a computer for Rs 1,00,000 in February (used for less than 180 days in that financial year), the first year depreciation at 40% WDV is halved to 20%, giving Rs 20,000 instead of Rs 40,000. From the second year, full depreciation applies on the remaining WDV of Rs 80,000.
Additional Depreciation for Manufacturing Companies
Section 32(1)(iia) of the Income Tax Act offers a significant tax benefit to manufacturing businesses. When a manufacturing company acquires and installs new plant and machinery, it can claim additional depreciation of 20% on the actual cost of the asset. This is over and above the regular depreciation.
Key conditions for additional depreciation include: the asset must be new (not second-hand), it must be acquired and installed in a manufacturing or power generation unit, and it is available only in the year of installation. If the half-year rule applies, additional depreciation is also reduced to 10% for the first year, with the remaining 10% claimable in the following year.
Important Note: Under the Income Tax Act, depreciation is computed on the WDV of the block of assets, not on individual assets. All assets with the same depreciation rate are grouped into a single block, and depreciation is calculated on the total WDV of that block. Use our Income Tax Calculator to see the full impact on your tax liability.
Depreciation Under the Companies Act 2013
Schedule II of the Companies Act 2013 specifies the useful life for various categories of assets. Companies must provide depreciation in their profit and loss account using either the SLM or WDV method, based on the prescribed useful life. The residual value should not exceed 5% of the original cost of the asset.
If a company uses an asset beyond its useful life under Schedule II, the remaining depreciable amount (net of residual value) should be charged to the opening retained earnings in the year the useful life expires. Professional guidance from a qualified accountant is recommended for complex depreciation scenarios.
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Frequently Asked Questions
Depreciation is the systematic allocation of the cost of a tangible or intangible asset over its useful life. It reflects the reduction in value of an asset due to wear and tear, passage of time, or obsolescence. Depreciation is important because it allows businesses to spread the cost of an asset over multiple years, reducing taxable income each year and accurately representing the value of assets on the balance sheet.
Under the Straight Line Method (SLM), an equal amount of depreciation is charged every year over the useful life of the asset. Under the Written Down Value (WDV) method, depreciation is charged on the reducing balance of the asset, resulting in higher depreciation in the initial years and lower amounts in later years. SLM is prescribed under the Companies Act 2013 while WDV is commonly used under the Income Tax Act 1961.
For income tax purposes in India, the Written Down Value (WDV) method is the prescribed method under Section 32 of the Income Tax Act 1961. The rates are specified in Appendix I to Rule 5(1) of the Income Tax Rules. You must use WDV rates when computing taxable income, regardless of the method you follow in your books of accounts.
The Companies Act 2013 prescribes the Straight Line Method (SLM) based on the useful life of assets as specified in Schedule II. Companies can use either SLM or WDV in their books, but the useful life cannot exceed the limits specified in Schedule II. The SLM rate equals 100 divided by the useful life in years.
Under the Income Tax Act, computers and computer software attract a WDV depreciation rate of 40%, which is one of the highest rates available. Under the Companies Act 2013, the useful life is 3 years, giving an SLM rate of approximately 31.67%. This high rate reflects the rapid technological obsolescence of computing equipment.
Motor cars not used for hire attract a WDV rate of 15% under the Income Tax Act and have a useful life of 8 years under the Companies Act (SLM rate of approximately 11.88%). Commercial vehicles used for hire attract a higher WDV rate of 30% with a useful life of 6 years (SLM rate of approximately 15.83%).
Residential buildings attract a WDV rate of 10% with a useful life of 60 years (SLM rate of 1.58%). Non-residential buildings like offices and commercial spaces also attract 10% WDV but have a useful life of 30 years (SLM rate of 3.17%). Factory buildings follow the same rates as commercial buildings. Temporary structures attract 40% WDV.
General furniture and fittings attract a WDV rate of 10% under the Income Tax Act with a useful life of 10 years under the Companies Act (SLM rate of 9.50%). Electrical fittings including wiring follow the same rates. These cover items like office desks, chairs, cabinets, and decorative fixtures.
Under the Income Tax Act, if an asset is used for less than 180 days during the financial year of acquisition, only 50% of the normal depreciation rate is allowed for that year. This is commonly known as the half-year rule. From the second year onwards, the full depreciation rate applies on the written down value.
Section 32(1)(iia) provides additional depreciation of 20% on the actual cost of new plant and machinery acquired and installed by manufacturing businesses. This is available only in the year of installation and only for new assets (not second-hand). The additional depreciation is over and above the normal depreciation at prescribed WDV rates.
No. Following the amendment introduced by the Finance Act 2021, goodwill is no longer considered a depreciable asset under the Income Tax Act. Goodwill of a business or profession is specifically excluded from the definition of intangible assets eligible for depreciation under Section 32. This applies from Assessment Year 2021-22 onwards.
Mobile phones and smartphones are treated as electronic equipment and attract a WDV rate of 40% under the Income Tax Act. Under the Companies Act 2013, they have a useful life of 3 years, giving an SLM rate of approximately 31.67%. This high rate accounts for the rapid obsolescence of mobile technology.
Under the Straight Line Method, annual depreciation equals (Cost of Asset minus Residual Value) divided by the Useful Life in years. For example, for an asset costing Rs 10,00,000 with a residual value of Rs 50,000 and useful life of 10 years, the annual depreciation is (10,00,000 minus 50,000) / 10 = Rs 95,000 per year.
Under the Written Down Value method, depreciation is calculated as a percentage of the opening WDV (book value) of the asset each year. In the first year, WDV equals the actual cost. For subsequent years, WDV = Previous year WDV minus depreciation charged. For example, for an asset costing Rs 10,00,000 at 15% WDV, first year depreciation is Rs 1,50,000 and second year depreciation is Rs 1,27,500.
Renewable energy devices including solar panels, windmills, and biomass gasifiers attract a special WDV rate of 40% under the Income Tax Act. The useful life under the Companies Act is 22 years (SLM rate of approximately 4.32%). This favorable rate encourages investment in clean and sustainable energy infrastructure.
Yes. Under Section 32(1)(ii) of the Income Tax Act, depreciation on intangible assets like know-how, patents, copyrights, trademarks, licences, and franchises is allowed at a WDV rate of 25%. These are amortized over their useful life, subject to a maximum of 10 years. Computer software has a separate higher rate of 40%.
General plant and machinery that does not fall under any specific category attracts a WDV rate of 15% under the Income Tax Act with a useful life of 15 years under the Companies Act (SLM rate of 6.33%). Specific items within plant and machinery may have higher rates, such as computers at 40% or energy saving devices at 40%.
A block of assets is a group of assets falling within the same class of assets having the same rate of depreciation. Under the Income Tax Act, depreciation is computed on the WDV of the entire block rather than on individual assets. When an asset is sold, the sale proceeds reduce the WDV of the block, and depreciation continues on the remaining balance.
Depreciation is an allowable deduction under Section 32 of the Income Tax Act while computing business or professional income. It reduces your gross total income, thereby lowering your tax liability. For example, if your business income before depreciation is Rs 20 lakh and depreciation is Rs 3 lakh, your taxable business income becomes Rs 17 lakh.
Ocean-going ships attract a WDV rate of 20% with a useful life of 20 years. Inland water vessels also attract 20% WDV with a 13-year useful life. Speed boats have 20% WDV with 13 years useful life. Dredgers, tugs, and barges follow 20% WDV with 13 years useful life under the Companies Act 2013.
Yes, depreciation can be claimed on second-hand (used) assets purchased for business purposes. The depreciation rate remains the same as for new assets. However, additional depreciation under Section 32(1)(iia) is not available for second-hand assets. The useful life under the Companies Act should be reduced by the number of years the asset was already used.
If the total sale proceeds from assets in a block exceed the opening WDV plus additions during the year, the resulting surplus is treated as short-term capital gain under Section 50 of the Income Tax Act. If the WDV reaches zero and no assets remain in the block, the block ceases to exist and no further depreciation is available.
Office equipment such as typewriters, copiers, scanners, and fax machines attract a WDV rate of 15% under the Income Tax Act with a useful life of 5 years under the Companies Act (SLM rate of approximately 19.00%). Note that computers and data processing equipment have a separate higher rate of 40%.
For income tax purposes, depreciation is mandatory. The Income Tax Act requires depreciation to be computed and allowed as a deduction irrespective of whether it is claimed by the assessee. Under the Companies Act 2013, depreciation must be provided in the books of accounts as per Schedule II to present a true and fair view of the financials.
Air conditioning and refrigeration equipment falls under the general plant and machinery category with a WDV rate of 15% under the Income Tax Act. The useful life under the Companies Act 2013 is 15 years, resulting in an SLM rate of approximately 6.33%. Central AC systems in buildings may be classified separately.
Under the Income Tax Act, if an asset is put to use for 180 days or more during the year of acquisition, full depreciation is allowed. If the asset is used for less than 180 days, only 50% of the normal depreciation is allowed (half-year rule). Under the Companies Act, depreciation is typically computed on a pro-rata basis from the date the asset is put to use.
Air and water pollution control equipment attract a WDV rate of 15% under the Income Tax Act with a useful life of 15 years under the Companies Act (SLM rate of 6.33%). This rate applies to equipment specifically acquired and installed for the purpose of controlling pollution as required by environmental regulations.
Yes. Under Section 32(2) of the Income Tax Act, unabsorbed depreciation (depreciation that exceeds the total income) can be carried forward indefinitely and set off against income of subsequent years. There is no time limit for carrying forward unabsorbed depreciation, unlike business losses which have an 8-year limit.
Schedule II of the Companies Act 2013 specifies the useful life for different categories of assets. The useful life represents the period over which an asset is expected to be available for use by the entity. Depreciation under the Act is calculated based on this useful life. The rates provided are minimum rates, and companies cannot use a longer useful life than what is specified.
Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the remaining lease term. Under the Income Tax Act, leasehold improvements are treated as part of the building block and depreciated at the applicable building rate. Under the Companies Act, they are written off over the lease period on a straight-line basis.
Laboratory and surgical equipment made of glass attracts a WDV rate of 40% under the Income Tax Act with a useful life of 5 years under the Companies Act (SLM rate of approximately 19.00%). Other laboratory equipment that is not made of glass follows the general plant and machinery rate of 15% WDV.
The Finance Act can amend depreciation rates and rules through its annual provisions. Notable recent changes include the removal of depreciation on goodwill (Finance Act 2021), introduction of additional depreciation for manufacturing companies, and changes in useful life specifications. Always check the latest Finance Act provisions before computing depreciation.
Energy saving devices attract a favorable WDV rate of 40% under the Income Tax Act with a useful life of 8 years under the Companies Act (SLM rate of approximately 11.88%). This includes devices like solar water heaters, LED lighting systems, and energy-efficient motors. The higher rate is designed to incentivize energy conservation.
Under the Companies Act 2013, a company can change its method of depreciation from SLM to WDV or vice versa, but such a change must be disclosed in the financial statements along with the impact on the profit for the year. For income tax purposes, only the WDV method is allowed, so there is no option to change.
You should maintain a fixed asset register with details of each asset including date of purchase, cost, date put to use, depreciation method and rate, annual depreciation amount, and accumulated depreciation. Retain purchase invoices, installation certificates, and any documents proving the asset is used for business purposes.
For assets acquired by gift or inheritance, the actual cost for depreciation purposes under the Income Tax Act is the cost to the previous owner minus depreciation that would have been allowed. The WDV is computed by reducing the notional depreciation from the original cost or the market value on the date of acquisition, whichever is lower.
Toll roads under BOT (Build-Operate-Transfer) or BOOT concession attract a WDV rate of 15% under the Income Tax Act. The useful life is typically the concession period, which can be up to 30 years. The SLM rate is approximately 3.33% for a 30-year concession. The actual useful life should match the contract period.
Startups registered under the Startup India scheme follow the same depreciation rules as other businesses. However, startups can benefit from the higher depreciation rates on computers (40%) and technology equipment. Additionally, startups eligible for Section 80-IAC deduction can still claim depreciation on their assets. Use our Business Setup Calculator to estimate costs.
If an asset is used partly for business and partly for personal purposes, depreciation is allowed only on the proportion used for business. For example, if a car costing Rs 10 lakh is used 60% for business, depreciation at 15% WDV is calculated on 60% of the cost, which is Rs 6 lakh, giving Rs 90,000 depreciation in the first year.
Under the Companies Act 2013, the residual value (scrap value) of an asset should not be more than 5% of the original cost. Depreciation is calculated on the cost minus the residual value over the useful life. Under the Income Tax Act WDV method, residual value is not separately considered as the asset is depreciated at a fixed percentage of the reducing balance each year.
