How to calculate depreciation as per Income Tax Act online?

Depreciation as per Income Tax Act 1961 — Online Calculator: Income Tax uses Block of Assets concept — all assets in same category form one block. Method: Always Written Down Value (WDV). Formula: Depreciation = Opening WDV x Rate%. Opening WDV of block = Closing WDV of previous year + Assets added during year - Assets sold during year. Key IT Act rules: 1. Only WDV method — SLM not allowed for income tax (except power sector). 2. Half-year rule: Assets purchased after October 1 (second half of FY) get only 50% depreciation in year of purchase. 3. Additional depreciation (Sec 32(1)(iia)): 20% extra depreciation in first year for new plant & machinery in manufacturing. 4. Block concept: Same rate assets grouped together. Sale proceeds deducted from block, not individual asset. 5. No depreciation if WDV of block becomes nil. 6. Rates range: 5% (residential buildings) to 100% (books for annual publication). Computers & software: 40%. Motor cars: 15%. Plant & machinery (general): 15%.

What is the difference between Companies Act and Income Tax Act depreciation?

Key Differences — Companies Act vs Income Tax Act Depreciation: 1. Method: Companies Act: Both SLM and WDV allowed (company chooses). Income Tax: Only WDV (except power generation). 2. Useful Life vs Rates: Companies Act: Based on useful life (Schedule II). Income Tax: Prescribes fixed WDV rates by asset class. 3. Block vs Individual: Companies Act: Depreciation per individual asset. Income Tax: Block of assets concept (all same-rate assets grouped). 4. Residual Value: Companies Act: Minimum 5% of original cost. Income Tax: No residual value — depreciation continues until block WDV is nil. 5. Half-year rule: Companies Act: Pro-rata depreciation from date of use. Income Tax: 50% depreciation if purchased after October 1. 6. Additional depreciation: Not in Companies Act. Income Tax: 20% (Sec 32(1)(iia)) for new plant & machinery in manufacturing. 7. Purpose: Companies Act: Financial reporting/book depreciation. Income Tax: Tax computation — creates deferred tax assets/liabilities. Result: Book profit ≠ Taxable profit due to depreciation timing differences. This creates Deferred Tax Assets (DTA) or Deferred Tax Liabilities (DTL) in financial statements.

Depreciation Calculator India 2026 — Companies Act & Income Tax Act Online

Q: How to calculate depreciation as per Companies Act 2013 in Excel?

Depreciation as per Companies Act 2013 — Excel Formula: Companies Act 2013 Schedule II provides two methods: 1. SLM (Straight Line Method): Annual Depreciation = (Cost - Residual Value) / Useful Life. Excel formula: =SLN(Cost, Residual_Value, Useful_Life). Example: Asset cost Rs 10L. Residual value 5% = Rs 50,000. Useful life 15 years. Annual depreciation = (10,00,000 - 50,000) / 15 = Rs 63,333/year. Excel: =SLN(1000000, 50000, 15) = Rs 63,333. 2. WDV (Written Down Value): Rate derived from useful life. WDV Rate = 1 - (Residual Value/Cost)^(1/Useful Life). Annual Depreciation Year 1 = Cost x WDV Rate. Year 2 = (Cost - Year 1 Depreciation) x WDV Rate. Excel: =DB(Cost, Residual_Value, Life, Period) for each year. Key rules Companies Act 2013: Residual value must be at least 5% of original cost (cannot be zero unless justified). Component accounting mandatory for large assets. Schedule II provides useful life by asset class — company cannot choose its own useful life (unless it can justify technically).

Calculate depreciation as per Companies Act 2013 (SLM & WDV) and Income Tax Act 1961 (block of assets). Get year-wise depreciation schedule, Excel formulas, deferred tax computation, and asset book value tracking.

🏭 Companies Act 2013 — Schedule II 📊 Income Tax Act WDV Rates ✅ SLM & WDV Calculator 📄 Excel Depreciation Formulas 🔰 Block of Assets 📈 Deferred Tax (DTA/DTL)

Depreciation Calculator — Companies Act 2013

Calculate SLM Depreciation

Enter asset cost, residual value, and useful life. Get annual depreciation (SLM), year-wise schedule, and accumulated depreciation.

📈 Asset Details — Straight Line Method

Asset Cost / Original Cost (₹)₹10.00 L

₹1,000₹100 Crore

Residual / Salvage Value (₹)
Min 5% of cost under Companies Act₹50,000

₹0₹50 Crore

Useful Life (Years) — per Schedule II15 yrs

1 yr60 yrs

Asset Purchase Month (1=Apr, 12=Mar)Month 1 (April)

Apr (Month 1)Mar (Month 12)

Additional Depreciation (Sec 32(1)(iia)) — IT Act (%)0%

0% (Not applicable)20% (Manufacturing)

📈 SLM: Annual Dep = (Cost − Residual) / Life. Equal charge each year. Companies Act allows SLM or WDV. Excel: =SLN(Cost, Residual, Life).

🏭 Written Down Value Method

Asset Cost / Opening WDV (₹)₹10.00 L

₹1,000₹100 Crore

WDV Depreciation Rate (% p.a.)15%

1%100%

Number of Years to Calculate10 yrs

1 yr40 yrs

Is this Income Tax (Half-Year Rule)?No

No (Full year)Yes (50% if purchased Oct onwards)

Additional Depreciation — Year 1 (%)0%

0%20% (Sec 32(1)(iia))

🏭 WDV: Dep Year N = Opening WDV × Rate. WDV diminishes each year. Income Tax uses only WDV. Excel: =DB(Cost, Salvage, Life, Period). Half-year: 50% dep if purchased after Oct 1.

🔰 Income Tax — Block of Assets Calculator

Opening WDV of Block (Start of Year) (₹)₹25.00 L

₹0₹100 Crore

Assets Added During the Year (₹)₹5.00 L

₹0₹50 Crore

Sale Proceeds of Assets During Year (₹)₹0

₹0₹50 Crore

WDV Rate for this Block (%)15%

1%100%

New Assets Purchased After Oct 1? (Half-Year)No

No (Full year)Yes (50% for new additions)

🔰 Block = Opening WDV + Additions − Sale Proceeds. Depreciation = Block WDV × Rate (full year) OR Opening × Rate + Additions × Rate × 50% (if purchased after Oct 1).

📈 Annual Depreciation (SLM)

₹0

Dep Rate: 0% | Accum. Dep: ₹0 | WDV End: ₹0

Annual Dep.

₹0

Year 1

Book Value

₹0

end of Year 1

Tax Shield

₹0

at 25% corp tax

0% depreciated

Accumulated Dep. WDV / Book Value

YEAR-WISE DEPRECIATION SCHEDULE

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🏭 Depreciation as per Companies Act 2013 — Schedule II Rates (SLM & WDV)

Useful life, SLM rate, and WDV rate for major asset classes under Companies Act 2013 Schedule II. Residual value must be minimum 5% of original cost.

Asset Class	Useful Life (Yrs)	SLM Rate (%)	WDV Rate (%)	Annual Dep (SLM) on Rs 10L asset	Year 1 Dep (WDV) on Rs 10L asset
Buildings (RCC Frame)	60 yrs	1.58%	4.87%	₹15,833	₹48,700
Buildings (Non-RCC / Temporary)	3 yrs	31.33%	63.16%	₹316,667	₹631,600
Plant & Machinery (General)	15 yrs	6.33%	18.1%	₹63,333	₹181,000
Plant & Machinery (Continuous)	8 yrs	11.88%	31.23%	₹118,750	₹312,300
Computer & Data Processing Units	3 yrs	31.33%	63.16%	₹316,667	₹631,600
Furniture & Fittings	10 yrs	9.5%	25.89%	₹95,000	₹258,900
Motor Vehicles (Non-commercial)	8 yrs	11.88%	31.23%	₹118,750	₹312,300
Motor Vehicles (Commercial)	6 yrs	15.83%	39.3%	₹158,333	₹393,000
Office Equipment	5 yrs	19%	45.07%	₹190,000	₹450,700
Ships (General)	20 yrs	4.75%	13.91%	₹47,500	₹139,100
Railways (General)	15 yrs	6.33%	18.1%	₹63,333	₹181,000
Electrical Installations	10 yrs	9.5%	25.89%	₹95,000	₹258,900

SLM Rate = 100% / Useful Life (approx). WDV Rate is derived such that asset reaches 5% residual value at end of useful life: WDV Rate = 1 − (0.05)^(1/Life). Residual value must be minimum 5% of original cost under Schedule II — cannot depreciate asset below this. Component accounting: For assets costing over Rs 10 crore, major components with different useful lives must be depreciated separately. Example: An aircraft body (20 yrs) vs its engines (15 yrs) vs avionics (10 yrs) — each component depreciated separately. Most companies use SLM for simplicity, WDV for assets that lose value quickly (vehicles, electronics). WDV gives higher depreciation in early years = lower profit in early years = lower early-year tax (if same method used for IT act).

📊 Depreciation as per Income Tax Act Online — Block of Assets Rates 2026

WDV depreciation rates for major asset blocks under Income Tax Act 1961 Section 32. These are WDV rates applied on the block's written down value each year.

Buildings — Residential

5% WDV

Sec 32(1)(ii)

Buildings — Non-residential

10% WDV

Sec 32(1)(ii)

Buildings — Temporary structure

40% WDV

Sec 32(1)(ii)

Furniture & Fittings

10% WDV

Sec 32(1)(ii)

Plant & Machinery — General

15% WDV

Sec 32(1)(ii)

Plant & Machinery — Motor cars (not for hire)

15% WDV

Sec 32(1)(ii)

Motor Vehicles — Buses, lorries, taxis (for hire)

30% WDV

Sec 32(1)(ii)

Computers & Software

40% WDV

Sec 32(1)(ii)

Books (Annual Publications)

100% WDV

Sec 32(1)(ii)

Books (Professional / Other)

60% WDV

Sec 32(1)(ii)

Ships

20% WDV

Sec 32(1)(ii)

Aircraft

40% WDV

Sec 32(1)(ii)

Income Tax Act: All assets in same rate block grouped together. Additional Depreciation (Sec 32(1)(iia)): 20% additional depreciation in first year for NEW plant & machinery used in manufacturing or power generation. Not available on used assets, offices, residential property, or office appliances. Half-year rule: If asset is put to use for less than 180 days (i.e., purchased after October 1), only 50% depreciation allowed in that year — applies to both regular and additional depreciation. Accelerated depreciation: Available for solar energy equipment (40%), energy-saving devices (80%), some pollution control equipment. No depreciation on land (ever — land does not depreciate). No depreciation if asset not put to use during the year.

📄 Depreciation Calculator as per Companies Act in Excel — Ready Formulas

Copy-paste Excel formulas for depreciation under Companies Act (SLM/WDV) and Income Tax Act. Blue monospace formula on dark background.

📊 SLM Depreciation/Year

=(Cost - Salvage) / Useful_Life

Straight Line Method. Equal charge each year.

📊 WDV Depreciation (Yr1)

=Cost * Rate

WDV = Written Down Value. Apply rate on opening WDV.

📊 WDV in Year N

=Cost * (1 - Rate)^N * Rate

Depreciation charge for any specific year N.

📊 WDV Book Value (Yr N)

=Cost * (1 - Rate)^N

Book/Written Down Value at end of Year N.

📊 SLM Rate from Life

=1 / Useful_Life

SLM rate = 1/life. E.g., 15 yrs → 6.67% p.a.

📊 WDV Rate from Life

=1 - (Salvage/Cost)^(1/Life)

Implied WDV rate from cost, salvage, and life.

📊 Accumulated Depreciation

=Cost - WDV_Book_Value

Total depreciation charged till date.

📊 Excel SLM function

=SLN(Cost, Salvage, Life)

Excel built-in SLM. SLN = Straight Line.

📊 Excel WDV function

=DB(Cost, Salvage, Life, Period)

Excel built-in Declining Balance. DB function.

📊 Excel DDB function

=DDB(Cost, Salvage, Life, Period)

Double Declining Balance (200% WDV).

Excel Depreciation Schedule — complete setup: Column A = Year. Column B = Opening WDV (B2 = Cost, B3 = =C2). Column C = Closing WDV (=B2*(1-Rate) for WDV, or =B2-SLM_Dep for SLM). Column D = Depreciation (=B2-C2). Column E = Accumulated Depreciation (=E1+D2). For SLM: use =SLN(Cost, Salvage, Life) for every year — it returns the same value each year. For WDV: use =DB(Cost, Salvage, Life, Period, Month) where Month=12 if full year. For Income Tax Block: B2 = Opening WDV + Additions – Sale proceeds. Depreciation = B2 × Rate. New additions after Oct 1: use 50% rate on additions only.

💡 4 Critical Depreciation Rules Every Indian Business Must Know

Depreciation errors cause ITR scrutiny and Companies Act compliance issues. These four rules prevent the most common mistakes.

🏭

Companies Act vs Income Tax Act — Two Different Depreciation Calculations

The most important thing to understand about depreciation in India: Companies Act and Income Tax Act have completely separate depreciation rules. You need BOTH calculations. Companies Act 2013 (Book Depreciation): Purpose: Financial reporting — Profit & Loss account and Balance Sheet. Method: SLM or WDV (company can choose, must disclose). Useful life: As per Schedule II. Residual value: Minimum 5% of cost. Individual asset tracking. Income Tax Act 1961 (Tax Depreciation): Purpose: Tax computation — Computing business income for ITR. Method: Always WDV (no SLM option, except power generation). Rates: Specific prescribed rates by asset class. Block concept: All same-rate assets grouped. No residual value — block depreciates until nil. The difference between book depreciation and tax depreciation creates: Deferred Tax Asset (DTA): When tax depreciation > book depreciation (tax pays less this year, more later). Deferred Tax Liability (DTL): When book depreciation > tax depreciation (tax pays more this year, less later). This Deferred Tax must be recognised in financial statements under AS-22 / Ind AS 12. Small businesses often confuse the two and use IT Act rates for book accounts — this is incorrect and can cause audit objections from statutory auditors.

📊

Additional Depreciation (Sec 32(1)(iia)) — 20% Extra in Year 1

One of the most underutilised tax benefits for Indian manufacturers: Additional Depreciation of 20% of actual cost in the first year of use, over and above the normal depreciation. Who can claim: Manufacturing or production units. Power generation units. Conditions: Plant and machinery must be NEW (not second-hand). Must be used for manufacture/production (not for offices, residential, or conveyances). Cannot claim on: Second-hand/used machinery. Office equipment. Vehicles, ships, aircraft. Buildings. Example: New CNC machine purchased for Rs 50L in May 2025. Normal WDV depreciation at 15%: Rs 7.5L. Additional depreciation at 20%: Rs 10L. Total Year 1 tax depreciation: Rs 17.5L. Tax saving at 25% corporate rate: 17.5L × 25% = Rs 4.375L in Year 1 alone. Half-year rule: If purchased after October 1, both normal and additional depreciation restricted to 50%. So Year 1 additional dep = 10% (50% of 20%). The remaining 10% additional depreciation is carried forward to Year 2 and deducted in full. This carry-forward rule was introduced by Finance Act 2015 — many businesses don't know they can claim the unabsorbed additional depreciation in Year 2.

🔰

Block of Assets — The Most Confusing IT Act Concept Explained

The Income Tax Act does not compute depreciation on individual assets — it uses the concept of "Block of Assets" where all assets at the same depreciation rate form one pool. How block works: Opening WDV of block (start of FY). Add: Cost of new assets added during the year. Less: Sale proceeds of any assets sold during year. = Closing WDV = Adjusted Block WDV. Depreciation = Adjusted Block WDV × Rate. Why this creates complexity: Asset sold: Sale proceeds reduce the block. If sale proceeds > block WDV → Short Term Capital Gain (STCG). If block becomes nil but sale proceeds still exceed it → Capital Gain on entire proceeds. If only one asset in block and it's sold → Block ceases to exist. Slump sale: All assets sold together → separate LTCG/STCG computation. Practical example: Block of plant & machinery @ 15%. Opening WDV: Rs 50L. New machine purchased in June: Rs 20L. Old machine sold in November: Rs 8L. Adjusted Block: 50 + 20 - 8 = Rs 62L. New machine purchased after October 1: 50% rule only applies to purchases after October 1. June purchase: Full year. Depreciation: 62L × 15% = Rs 9.3L (simplistic — see note on additions). Note: For assets added during year, some tax practitioners apply depreciation from date of put-to-use, not block concept. Follow your CA's advice on this.

📄

Depreciation in Excel — Building Your Own Schedule Correctly

Building a depreciation schedule in Excel for Companies Act and Income Tax Act: Step 1 — SLM schedule (Companies Act): Row headers: Year, Opening WDV, Depreciation, Closing WDV, Accumulated Dep. Year 1 depreciation: =(Cost - Residual) / Life. Every year same. Excel function: =SLN(B2, ResidualValue, Life) in Column C. Drag down for all years. Column D (Closing WDV): =B-C. Column B next row = previous D. Stop when Closing WDV = Residual Value. Step 2 — WDV schedule (Income Tax): Year 1 depreciation: =Cost × Rate / 100. Year 2: =(Cost - Year1Dep) × Rate / 100. Excel function: =DB(Cost, Salvage, Life, Period) — but for IT Act, use Salvage = 1 (or 0) since no residual value. Better: Manual WDV formula: =B2×Rate where B2 is opening WDV. Column D = B × Rate. Column B (next year) = B - D. Step 3 — Comparison sheet: Show book depreciation (SLM) vs IT Act depreciation (WDV) side by side. Compute Timing Difference = IT Dep - Book Dep. Deferred Tax = Timing Difference × Tax Rate. Cumulative Deferred Tax = DTA (if negative) or DTL (if positive). This comparison sheet is mandatory for your Chartered Accountant when preparing financial statements under Schedule III of Companies Act.

❓ Depreciation Calculator — Frequently Asked Questions India 2026

Most searched depreciation calculation questions India 2026.

Companies Act Depreciation — Excel Formula:

SLM Method:
Annual Dep = (Cost − Residual Value) / Useful Life
Excel: =SLN(Cost, Residual, Life)

Example: Plant & Machinery
Cost: Rs 10,00,000
Residual Value: Rs 50,000 (5% of cost)
Useful Life: 15 years (Schedule II)
Annual SLM Dep = (10,00,000 − 50,000) / 15 = Rs 63,333/year
Excel: =SLN(1000000, 50000, 15)

WDV Method:
WDV Rate from life: =1-(Residual/Cost)^(1/Life)
= 1 − (50000/1000000)^(1/15) = 18.10% WDV rate
Year 1 Dep = 10,00,000 × 18.10% = Rs 1,81,000
Excel: =DB(1000000, 50000, 15, 1)

Key Rules:
✅ Residual value minimum 5% of cost
✅ Useful life as per Schedule II
✅ Pro-rata from date of put-to-use
✅ Component accounting for large assets

Income Tax Act Depreciation — WDV Method:

Formula:
Depreciation = Opening WDV of Block × Rate%

Block WDV Calculation:
Opening WDV (previous year closing WDV)
+ Cost of assets added this year
− Sale proceeds of assets disposed
= Adjusted WDV
Depreciation = Adjusted WDV × Rate

Example: Plant & Machinery Block (15%)
Opening WDV: Rs 25 lakh
Addition (June): Rs 5 lakh
Sale proceeds: Rs 2 lakh
Adjusted WDV = 25 + 5 − 2 = Rs 28 lakh
Depreciation = 28 × 15% = Rs 4.2 lakh
Closing WDV = 28 − 4.2 = Rs 23.8 lakh

Half-year rule:
If new assets purchased after October 1: 50% dep only in Year 1.
Apply to additions only, not to entire block.

SLM vs WDV Depreciation:

Straight Line Method (SLM):
Equal charge every year
Annual Dep = (Cost − Residual) / Life
Book value decreases uniformly
Simpler. Better for assets with uniform use
Allowed under Companies Act
NOT allowed under Income Tax Act (IT)

Written Down Value (WDV):
Higher depreciation in early years, lower later
Annual Dep = Opening WDV × Rate
Book value never reaches zero (approaches asymptotically)
Better for assets that lose value quickly (vehicles, electronics)
Allowed under both Companies Act and IT Act
Only method under IT Act

Comparison on Rs 10L asset, 15 yrs, WDV 18.10%:
Year 1: SLM Rs 63,333 vs WDV Rs 1,81,000
Year 5: SLM Rs 63,333 vs WDV Rs 84,000
Year 10: SLM Rs 63,333 vs WDV Rs 37,000
Year 15: SLM Rs 63,333 vs WDV Rs 16,000

WDV: More tax benefit in early years. SLM: Spread evenly.

Deferred Tax from Depreciation:

When IT Act depreciation ≠ Companies Act depreciation, timing differences arise.

Scenario: WDV under IT Act, SLM under Companies Act
Year 1: IT dep (WDV) = Rs 1,81,000. Book dep (SLM) = Rs 63,333.
IT dep > Book dep by Rs 1,17,667.
Taxable profit < Book profit. Pay less tax now. Pay more later.
This creates Deferred Tax Liability (DTL).
DTL = Rs 1,17,667 × 25% (tax rate) = Rs 29,417.

Later years (Year 10+):
IT dep < Book dep (WDV smaller, SLM same).
Taxable profit > Book profit. Pay more tax now.
DTL reverses — reduces to zero and may create DTA.

Journal Entry (Year 1):
Dr Profit & Loss (deferred tax expense)
Cr Deferred Tax Liability (Balance Sheet)

Under Ind AS 12 / AS 22:
This deferred tax must be recognised in financial statements.
Failure to recognise is a qualification in audit report.
DTA/DTL reconciliation required in Notes to Accounts.

Termination of Block — Income Tax Act:

When block ceases to exist:
All assets in block are sold/scrapped during the year.

If Sale Proceeds > Opening WDV of block:
The excess = Short Term Capital Gain (STCG).
Taxable as business income (not capital gains separately).
No depreciation in the year block terminates.

If Sale Proceeds < Opening WDV of block:
The deficit = Terminal Allowance (allowed as deduction).
This is like a final depreciation claim on the unsold WDV.

Example:
Block WDV at start: Rs 10 lakh. All assets sold for Rs 12 lakh.
STCG = 12 − 10 = Rs 2 lakh. Taxable at applicable rate.

Block WDV at start: Rs 10 lakh. All assets sold for Rs 7 lakh.
Terminal allowance = Rs 3 lakh deductible from income.

Practical note:
If only SOME assets sold from block: No capital gain/loss.
Sale proceeds simply reduce the block WDV.
Capital gain only when entire block terminates.

📊 Depreciation Compliance — Get Expert Accounting & Tax Help

Depreciation computation errors are one of the most common reasons for income tax assessment, audit qualifications, and MCA compliance issues. Vikash Royal connects you with SEBI-registered advisors and chartered accountants who can compute correct depreciation schedules under both Companies Act and Income Tax Act, prepare deferred tax workings, handle additional depreciation claims (Sec 32(1)(iia)), and manage block of assets calculations for your business. SEBI-Registered. ARN: ARN-356458

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