Depreciation rates under the Income-tax Act

Income-tax depreciation is computed on the WDV of asset BLOCKS at prescribed rates: computers including software 40%, plant & machinery (general) 15%, motor vehicles 15% (30% if used in a hire business), furniture & fittings 10%, buildings 10% (residential 5%), intangible assets 25%.

Key points

• §32 read with Rule 5 / Appendix I prescribes WDV-block rates.
• The commonly used blocks: Computers including computer software — 40%.
• Plant and machinery (general) — 15%.
• Motor cars — 15% (30% when used in a business of running them on hire).
• Furniture and fittings including electrical fittings — 10%.
• Buildings used mainly for non-residential purposes — 10%;
• residential buildings — 5%;
• purely temporary erections — 40%.
• Intangible assets (know-how, patents, copyrights, trademarks, licences, franchises) — 25%; Ships — 20%.
• Books owned by a professional (annual publications) — 40%.
• Depreciation is restricted to 50% of the prescribed rate when the asset is put to use for less than 180 days in the year of acquisition (§32 second proviso).
• Additional depreciation of 20% under §32(1)(iia) is available to manufacturing entities on new plant & machinery, over and above these rates.

Reference: §32 / Rule 5 / Appendix I, ITA 1961