This presentation is about how depreciation is treated under Income tax (India); the data as of assessment year 2016-17

1. DEPRECIATION
INCOME TAX
LAW AND PRACTICE
(INDIA)

2. What is Depreciation?
Gradual decrease in the value of asset
Charged out of
Profits and Gains of Business
Income from other Sources

3. Types of Asset
Tangible Asset
Building
Non-Factory
Factory
Priority
Temporary
structures
Plant Machinery Furniture
Intangible Asset
Patents, Copyright,
Know-how, License,
Trademarks

4. 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

5. 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

6. Block of Asset
No. 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

7. 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 1.4.2001-31.3.2004
11. 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

8. 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

9. Additional Depreciation
The 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

10. THANK YOU!
Presented by:
BHARTI GOYAL D.
II B.COM [CA]