Depreciation Calculator India 2026
Calculate asset depreciation using Straight Line, Written Down Value (WDV), Double Declining Balance, and Sum of Years' Digits methods for tax and accounting purposes.
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Depreciation Methods Explained
Choose the right method for your business needs
Straight Line Method (SLM)
Equal depreciation each year over asset's useful life.
Written Down Value (WDV)
Depreciation on reducing balance - higher in early years.
Double Declining Balance
Accelerated depreciation - twice the straight-line rate.
Sum of Years' Digits
Accelerated method using fraction of remaining life.
Depreciation Calculation Formulas
Mathematical formulas for calculating asset depreciation using different methods for tax and accounting purposes in India.
Annual Depreciation = (Asset Cost - Salvage Value) / Useful LifeExample:
₹5,00,000 asset, ₹50,000 salvage, 5 years life
Variables:
Depreciation = Book Value × Rate | Rate = 1 - (Salvage/Cost)^(1/Life)Example:
₹5,00,000 asset, 40% WDV rate (computers)
Variables:
Depreciation = Book Value × (2 / Useful Life)Example:
₹5,00,000 asset, 5 years life (2/5 = 40% rate)
Variables:
Depreciation = (Remaining Life / Sum of Years) × Depreciable AmountExample:
₹4,50,000 depreciable, 5 years (sum=15)
Variables:
Depreciation = Opening WDV × Prescribed Rate × (Days Used / 365)Example:
Computer ₹1,00,000, used 200 days, 40% rate
Variables:
These formulas provide the mathematical foundation for the calculations. Actual results may vary based on rounding, compounding frequency, and specific lender policies.
Who Should Use Depreciation Calculator?
Understanding if depreciation calculation benefits your business or profession
Ideal For
May Not Need If
Tax Implications of Depreciation in India
How depreciation affects your tax liability under Income Tax Act
Section 32: Depreciation Allowance
Under Section 32 of the Income Tax Act, depreciation is allowed as a deduction from business income for assets used in business or profession.
Common Depreciation Rates (As per IT Rules)
Additional Depreciation (Section 32(1)(iia))
Manufacturing businesses can claim additional 20% depreciation on new plant and machinery acquired after March 31, 2005.
Important Tax Considerations
Depreciation Tips & Best Practices
Maximize tax benefits and maintain accurate records
Maintain Records
Purchase Timing
Classify Correctly
Pro Tip
Consult with a CA to ensure you're using the right depreciation method and rates as per Income Tax Act. Different methods may apply for book accounting vs tax purposes.
Complete Guide to Asset Depreciation in India
Everything businesses, CAs, and tax professionals need to know — explained simply
1What is Asset Depreciation and Why Does Every Business Need to Track It?
Asset depreciation is the gradual reduction in the value of a tangible asset over its useful life. Think of it this way — when your business buys a machine for ₹5 lakh today, it won't be worth ₹5 lakh five years later. Depreciation is simply the accounting way of acknowledging that wear, tear, and time reduce an asset's value.
For Indian businesses, depreciation is not just an accounting concept — it's a powerful tax-saving tool under Section 32 of the Income Tax Act. Every rupee you claim as depreciation reduces your taxable business income, which directly lowers your tax outgo.
Who benefits most from tracking depreciation?
- Manufacturing companies with heavy plant and machinery investments
- IT companies and startups purchasing computers, servers, and software
- Professionals and freelancers using equipment for business purposes
- Transport businesses with vehicles and fleet
2SLM vs WDV — Which Depreciation Method Should You Actually Use in India?
This is the most common question businesses and CAs face, and the answer depends on why you're calculating depreciation. There are two parallel compliance requirements in India — one for Income Tax and one for Company Law.
For Income Tax Filing (ITR)
You must use the Written Down Value (WDV) method. This is mandatory under the Income Tax Act. The WDV method gives you higher deductions in the early years — which is great for tax planning.
For Books of Accounts (Companies Act)
Companies registered under the Companies Act 2013 must use the Straight Line Method (SLM) for their statutory accounts. SLM spreads depreciation equally across all years.
Practical tip: Most businesses in India maintain two sets of depreciation schedules — WDV for tax purposes (ITR) and SLM for statutory accounts. Your CA will typically handle this reconciliation. This dual-method approach is completely legal and standard practice.
3What are the Standard Depreciation Rates Under the Income Tax Act for Common Assets?
The Income Tax Rules, 1962 (Appendix I) prescribe specific depreciation rates for different asset classes. Unlike a free choice, you cannot pick any rate you prefer — the rate is determined by the block of assets your purchase falls into.
| Asset Type | WDV Rate (IT Act) | SLM Rate (Companies Act) |
|---|---|---|
| Computers & Peripherals | 40% | 33.33% |
| Computer Software | 40% | 33.33% |
| General Machinery | 15% | 5.28% |
| Vehicles (Non-commercial) | 15% | 9.5% |
| Commercial Vehicles | 30% | 11.88% |
| Office Furniture & Fittings | 10% | 6.33% |
| Buildings (RCC) | 5% | 1.58% |
| Buildings (Others) | 10% | 3.17% |
| Plant & Equipment (Heavy) | 15–30% | Varies |
Note: These are block rates, not individual asset rates. All assets in the same block are pooled together and depreciation is applied on the collective Written Down Value of the block.
4What is the 180-Day Rule and How Does It Affect Your First-Year Depreciation Claim?
The 180-day rule is one of the most important — and most missed — depreciation rules in India. Under the Income Tax Act, if an asset is purchased and put to use for less than 180 days in a financial year, you can only claim 50% of the normal depreciation in that year.
Full Depreciation Scenario
Buy a ₹1,00,000 computer on or before September 30 (180+ days in the financial year) → Claim full 40% = ₹40,000 in Year 1
Half Depreciation Scenario
Buy the same computer after October 1 (under 180 days) → Only claim 20% = ₹20,000 in Year 1
Smart planning tip: If you're planning to buy significant assets (machinery, computers, vehicles) near the end of the financial year, try to put them to use before October 1. This one timing decision can double your first-year depreciation deduction and meaningfully reduce your tax outgo.
5What is Additional Depreciation and Who Can Claim It Under Section 32(1)(iia)?
Over and above the regular depreciation, manufacturing and production businesses can claim an additional 20% depreciation on new plant and machinery in the year of acquisition. This is a huge benefit that many businesses overlook.
Who qualifies for additional depreciation?
- Businesses engaged in manufacturing or production of any article or thing
- New plant and machinery acquired after March 31, 2005
- Total first-year benefit: up to 35% depreciation (15% normal + 20% additional)
What is excluded from additional depreciation?
- Passenger cars, ships, and aircraft
- Office appliances and road transport vehicles
- Second-hand or previously used machinery
6What Happens to Your Depreciation When You Sell or Scrap an Asset?
Asset disposal is where many businesses get caught off guard at tax time. Since the Income Tax Act uses a block-of-assets concept (not individual asset tracking), the tax impact depends on whether the block still has remaining assets after the sale.
Three possible outcomes when you sell an asset:
Block still has other assets & sale proceeds < block WDV
Sale proceeds are simply deducted from the block WDV. No immediate tax impact — depreciation continues on the remaining balance.
Sale proceeds > block WDV (block becomes negative)
The excess is treated as a Short-Term Capital Gain (STCG) and is taxable in the year of sale — regardless of how long you held the asset.
All assets in block sold & WDV remains positive
The residual WDV becomes a terminal depreciation deduction — a lump-sum deduction available in that year.
7Can Freelancers and Salaried Professionals Claim Depreciation on Their Equipment?
Yes — but with important conditions. Freelancers, consultants, and self-employed professionals (doctors, lawyers, architects, designers) can claim depreciation on equipment used for their profession. Salaried employees, however, generally cannot — unless they have additional professional income.
What professionals can claim:
- Laptops and computers used for work
- Camera equipment (photographers)
- Medical equipment (doctors)
- Vehicle used for client visits
Key conditions to remember:
- Pro-rate for personal use — if used 60% for work, claim 60% depreciation
- Must maintain usage logs for mixed-use assets
- Assets below ₹5,000 can be expensed immediately
8What Are the Common Depreciation Mistakes That Lead to Tax Notices in India?
Depreciation errors are among the most common reasons for scrutiny notices from the Income Tax Department. Here are the mistakes businesses repeatedly make — and how to avoid them.
Claiming depreciation on land
Land is never depreciable. Only the building on it can be depreciated. Ensure your asset register clearly separates land value from building value.
Using wrong asset block / rate
Applying 40% (computer rate) to something that's classified as furniture (10%) is a common error. Always match the asset to its correct IT Rule block category.
Claiming full depreciation for late purchases
Assets acquired and put to use after October 1 qualify for only 50% of the prescribed rate. Many businesses forget to apply the 180-day restriction.
Depreciating personal assets mixed with business
If a vehicle or laptop is used partly for personal purposes, only the business-use proportion is eligible. Keep usage logs to justify the split.
Not accounting for the opening WDV correctly
Depreciation is always on the Opening WDV of a block (plus additions, minus disposals). Computing it on purchase cost every year is incorrect.
Depreciation Calculator FAQs
Everything you need to know about depreciation calculation, tax benefits, and asset management