Introduction
Depreciation is a critical concept in taxation and accounting. Under Section 32 of the Income Tax Act, 1961, depreciation allows taxpayers to claim a deduction for the gradual wear and tear of tangible and intangible assets used in business or profession. It ensures that the cost of assets is spread across their useful life, aligning tax deductions with economic reality.For FY 2025-26, depreciation continues to be calculated either on the Written Down Value (WDV) method or the Straight Line Method (SLM). The Income Tax Act prescribes specific rates for different blocks of assets, ensuring uniformity and fairness in tax computation
Depreciation Rates (WDV Method)
The WDV method is the default method applicable to most businesses. Assets are grouped into blocks, and depreciation is applied to the block as a whole rather than individual assets. Below is the detailed chart:
| Sr No | Particulars of Asset | Rate of Depreciation |
| 1 | Buildings used mainly for residential purposes (except hotels & boarding houses) | 5% |
| 2 | Buildings other than residential (including offices, factories, godowns, hotels) | 10% |
| 3 | Purely temporary erections such as wooden structures | 40% |
| 4 | Furniture & fittings including electrical fittings | 10% |
| 5 | Plant & machinery (general) | 15% |
| 6 | Motor cars (not used for hire) | 15% |
| 7 | Motor cars, other than those used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020. | 30% |
| 8 | Motor buses, lorries, taxis used for hire | 30% |
| 9 | Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020. | 45% |
| 10 | Aeroplanes, aero engines | 40% |
| 11 | Ships | 20% |
| 12 | Computers including software | 40% |
| 13 | Life saving medical equipment | 40% |
| 14 | Energy saving devices | 40% |
| 15 | Books (annual publications) | 100% |
| 16 | Books (other than annual publications) | 60% |
| 17 | Gas cylinders, containers | 40% |
| 18 | Rolling mills, steel plant machinery | 40% |
| 19 | Intangible assets (goodwill, patents, trademarks, licenses, franchises, know-how) | 25% |
Notes (WDV Method)
• Depreciation is calculated on the block of assets, not individual items.
• If an asset is acquired and put to use for less than 180 days in the year, only 50% of the rate is allowed.
• Additional depreciation of 20% is available for new plant and machinery acquired by manufacturing undertakings.
• Certain specialized assets (like books, gas cylinders, rolling mills) enjoy higher rates due to faster wear and tear.
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Depreciation Rates (SLM Method)
The Straight Line Method is applicable primarily to undertakings engaged in generation or distribution of power. Instead of fixed rates, assets are depreciated based on their useful life.
distribution of power. Instead of fixed rates, assets are depreciated based on their useful life.
| Sr No | Particulars of Asset | Life of Asset (Years) |
| 1 | Buildings (RCC Frame Structure, other than factory buildings) | 60 |
| 2 | Buildings (other than RCC Frame Structure, including factory buildings) | 30 |
| 3 | Fences, wells, tube wells | 5 |
| 4 | Temporary structures, others | 3 |
| 5 | Bridges, culverts, bunders | 30 |
| 6 | Carpeted Roads – RCC | 10 |
| 7 | Carpeted Roads – other than RCC | 5 |
| 8 | Non-carpeted Roads | 3 |
| 9 | Plant & Machinery (general) | 15 |
| 10 | Continuous process plant (not covered under special industries) | 25 |
| 11 | Cinematograph film machinery & projecting equipment | 13 |
| 12 | Glass manufacturing – furnaces | 13 |
| 13 | Glass manufacturing – moulds | 8 |
| 14 | Float glass melting furnaces | 10 |
| 15 | Mines & quarries – portable machinery | 8 |
| 16 | Telecom towers | 18 |
| 17 | Telecom equipment (switching, transmission, etc.) | 13 |
| 18 | Telecom ducts, cables, optical fibre, satellites | 18 |
| 19 | Oil & gas – refineries, assets, petrochemical plant, storage tanks, drilling rigs | 25 |
| 20 | Oil & gas – pipelines | 30 |
| 21 | Oil & gas – field operations equipment, loggers | 8 |
| 22 | Power generation – Thermal, Hydro, Nuclear, Transmission lines | 40 |
| 23 | Wind Power Plant | 22 |
| 24 | Electric Distribution Plant | 35 |
| 25 | Gas Storage & Distribution Plant, Water Distribution Plant | 30 |
| 26 | Steel – Sinter Plant, Blast Furnace, Coke Ovens, Rolling Mill | 20 |
| 27 | Steel – Basic Oxygen Furnace Converter | 25 |
| 28 | Non-ferrous metals – major equipment (pot line, digester, turbine, calcination, copper smelter, roll grinder) | 40 |
| 29 | Non-ferrous metals – Soaking Pit, Annealing Furnace, Rolling Mills, Scalping/Slitting equipment | 30 |
| 30 | Non-ferrous metals – Surface Miner, Ripper Dozer, Copper refining plant | 25 |
| 31 | Medical diagnostic equipment (X-ray, ECG, Ultrasound, etc.) | 13 |
| 32 | Other medical equipment | 15 |
| 33 | Pharmaceuticals – reactors, distillation, drying, tanks | 20 |
| 34 | Civil construction – concreting, crushing, piling, road making | 12 |
| 35 | Civil construction – cranes >100 tons | 20 |
| 36 | Civil construction – cranes <100 tons | 15 |
| 37 | Civil construction – transmission line, tunneling equipment | 10 |
| 38 | Civil construction – earth-moving equipment | 9 |
| 39 | Civil construction – other construction equipment | 12 |
| 40 | Salt works machinery | 15 |
| 41 | Furniture & fittings (general) | 10 |
| 42 | Furniture in hotels, restaurants, schools, theatres, etc. | 8 |
| 43 | Motor cycles, scooters, mopeds | 10 |
| 44 | Motor buses, lorries, cars, taxis (used for hire) | 6 |
| 45 | Motor buses, lorries, cars (not used for hire), tractors, harvesters, heavy vehicles, electric vehicles | 8 |
| 46 | Ocean-going ships – bulk carriers, liners, passenger vessels, coastal ships | 25–30 |
| 47 | Crude/product/chemical tankers | 20–25 |
| 48 | Offshore supply/support vessels, catamarans, high-speed boats | 20 |
| 49 | Drill ships | 25 |
| 50 | Hovercrafts | 15 |
| 51 | Fishing vessels (wooden hull) | 10 |
| 52 | Dredgers, tugs, barges, survey launches | 14 |
| 53 | Inland water vessels – speed boats | 13 |
| 54 | Inland water vessels – others | 28 |
| 55 | Aircrafts & helicopters | 20 |
| 56 | Railways sidings, locomotives, rolling stock, tramways | 15 |
| 57 | Ropeway structures | 15 |
| 58 | Office equipment | 5 |
| 59 | Computers – servers & networks | 6 |
| 60 | Computers – desktops, laptops | 3 |
| 61 | Laboratory equipment (general) | 10 |
| 62 | Laboratory equipment (educational institutions) | 5 |
| 63 | Electrical installations & equipment | 10 |
| 64 | Hydraulic works, pipelines, sluices | 15 |
Key Notes
• Blocks with identical useful lives have been combined for clarity (e.g., multiple steel plant assets grouped under 20 years).
• NESD = No Extra Shift Depreciation.
• Double shift increases depreciation by 50%, triple shift by 100%.
• Factory buildings exclude offices, godowns, staff quarters.
• Additions/disposals during the year require pro-rata depreciation.
• If a part of an asset has a significantly different useful life, it should be depreciated separately.
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Conclusion
Depreciation under the Income Tax Act for FY 2025-26 remains a cornerstone of tax planning and compliance. By categorizing assets into blocks and prescribing uniform rates, the law ensures fairness and simplicity.
• WDV Method applies to most businesses, with rates ranging from 5% for residential buildings to 100% for annual publications.
• SLM Method applies to power generation undertakings, with depreciation spread across useful life.
• Proper classification and compliance not only optimize tax deductions but also prevent disputes during assessments.
Depreciation is more than a statutory deduction, it reflects the economic reality of asset usage. Businesses should maintain accurate records, classify assets correctly, and apply the prescribed rates diligently to ensure smooth compliance in FY 2025-26.
Blog by : Mittal & Co.