Depreciation calculator for Indian businesses
Depreciation spreads the cost of a fixed asset over the years it is used. Indian businesses face two different sets of rules: the Companies Act 2013 (Schedule II), which prescribes useful lives for book depreciation, and the Income-tax Act, which prescribes block-wise WDV rates for tax depreciation. This calculator handles both, plus a custom mode for partnership firms and proprietors who follow their own policy, and produces a full year-wise schedule with chart and Excel export.
Straight Line Method (SLM)
Annual depreciation = (Cost − Residual Value) ÷ Useful Life. The same amount is charged every year. Preferred for buildings, furniture and assets that wear evenly.
Written Down Value (WDV)
Depreciation = Opening WDV × Rate. The charge is highest in the first year and declines. Under Schedule II the rate is derived from the useful life: Rate = 1 − (Residual ÷ Cost)1/Life. For a 15-year machine with 5% residual this works out to 18.10%.
Companies Act Schedule II highlights
- Useful lives: general plant & machinery 15 years, computers 3, servers 6, furniture 10, office equipment 5, motor cars 8, factory building 30, RCC building 60, hospital/medical equipment 13
- Residual value should not exceed 5% of original cost
- Depreciation is pro-rata from the date the asset is ready for use — a machine bought on 15 July is depreciated for 260 days in that financial year
Income-tax block rates and the 180-day rule
Tax depreciation is always WDV on the block of assets: buildings 5% / 10% / 40%, furniture 10%, plant & machinery 15%, motor cars 15%, commercial vehicles on hire 30%, computers and software 40%, intangibles 25%. If an asset is put to use for less than 180 days in the year of purchase, only half the rate is allowed that year. Manufacturers get an additional 20% depreciation on new plant & machinery under Section 32(1)(iia) (10% + 10% when used under 180 days).
Worked example
Machinery costing ₹5,00,000 put to use on 15 July 2025. Books (Schedule II, SLM, 15 yrs, 5% residual): annual depreciation ₹31,667; FY 2025-26 pro-rata for 260 days = ₹22,557. Tax (15% block): used 260 days ≥ 180, so full 15% = ₹75,000 in FY 2025-26; FY 2026-27 = 15% of ₹4,25,000 = ₹63,750. The difference between book and tax depreciation creates a deferred-tax entry in company accounts.
Uses
Fixed-asset registers, finalisation of accounts, ITR computation, deferred tax working, project reports, and deciding between buying and leasing. Download the schedule to Excel and paste it straight into your audit file.
Frequently Asked Questions
What is the 180-day rule in income tax depreciation?
If an asset is used for less than 180 days in the financial year it is acquired, only 50% of the normal rate is allowed for that year. From the next year the full rate applies on the WDV.
Which method should a private limited company use?
Companies must follow Schedule II useful lives for their books; SLM or WDV is a policy choice (SLM is more common). For tax they must separately compute block WDV depreciation at Income-tax rates.
What is the depreciation rate on computers?
Income-tax: 40% WDV (computers and software). Companies Act: 3-year useful life for desktops/laptops (≈31.67% SLM, 63.16% WDV) and 6 years for servers.
Can residual value be more than 5%?
Under Schedule II a company may use a higher residual value only with technical justification disclosed in the notes. The default and most common practice is 5%.
Does a proprietor or partnership firm need to follow Schedule II?
No. Schedule II applies to companies. Firms and proprietors follow Income-tax rates for tax and may use any reasonable method for their books — use the Custom mode.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.