Depreciation Calculator India 2025

Calculate asset depreciation using Straight Line, Written Down Value (WDV), Double Declining Balance, and Sum of Years' Digits methods for tax and accounting purposes.

Asset Value (Cost)

₹

₹10K₹50L

Salvage/Residual Value

₹

₹0₹2.50 L

Depreciable Amount: ₹4.50 L

Useful Life (Years)

years

1 year30 years

Depreciation Method

Note: For Indian Income Tax, WDV method is mandatory. Use SLM for Companies Act compliance.

Year 1 Depreciation

₹1.85 L

Total Depreciation

₹4.50 L

Final Book Value

₹50.00 K

Year-wise Depreciation Schedule

Year	Depreciation	Book Value
Year 1	-₹1.85 L	₹3.15 L
Year 2	-₹1.16 L	₹1.99 L
Year 3	-₹73.46 K	₹1.26 L
Year 4	-₹46.35 K	₹79.24 K
Year 5	-₹29.24 K	₹50.00 K

Depreciation Pattern

Year 136.9%

Year 223.3%

Year 314.7%

Year 49.3%

Year 55.8%

Depreciation Methods Explained

Choose the right method for your business needs

Straight Line Method (SLM)

Equal depreciation each year over asset's useful life.

Simple and easy to calculate

Required under Companies Act 2013

Not accepted for Income Tax purposes

Written Down Value (WDV)

Depreciation on reducing balance - higher in early years.

Mandatory for Income Tax Act

Reflects asset usage pattern

Higher tax savings in initial years

Double Declining Balance

Accelerated depreciation - twice the straight-line rate.

Maximum early-year deductions

Good for tech assets

Complex calculation

Sum of Years' Digits

Accelerated method using fraction of remaining life.

Higher depreciation in early years

Matches revenue generation

Not common in India

Depreciation Calculation Formulas

Mathematical formulas for calculating asset depreciation using different methods for tax and accounting purposes in India.

Straight Line Method (SLM)

Equal depreciation each year - required under Companies Act 2013.

Annual Depreciation = (Asset Cost - Salvage Value) / Useful Life

Example:

₹5,00,000 asset, ₹50,000 salvage, 5 years life

(5,00,000 - 50,000) / 5

= ₹90,000 per year

Variables:

Asset Cost - Original purchase price of asset

Salvage Value - Estimated residual value at end of life

Useful Life - Expected years of service

Written Down Value (WDV) Method

Mandatory for Income Tax Act - higher depreciation in early years.

Depreciation = Book Value × Rate | Rate = 1 - (Salvage/Cost)^(1/Life)

Example:

₹5,00,000 asset, 40% WDV rate (computers)

Year 1: 5,00,000 × 0.40 | Year 2: 3,00,000 × 0.40

= ₹2,00,000 | ₹1,20,000

Variables:

Book Value - Asset value at beginning of year

Rate - Depreciation rate calculated from salvage and life

Double Declining Balance

Accelerated depreciation - twice the straight-line rate.

Depreciation = Book Value × (2 / Useful Life)

Example:

₹5,00,000 asset, 5 years life (2/5 = 40% rate)

Year 1: 5,00,000 × 0.40 | Year 2: 3,00,000 × 0.40

= ₹2,00,000 | ₹1,20,000

Variables:

Book Value - Current value at beginning of year

Useful Life - Total expected years of service

Sum of Years' Digits

Accelerated method using fraction of remaining useful life.

Depreciation = (Remaining Life / Sum of Years) × Depreciable Amount

Example:

₹4,50,000 depreciable, 5 years (sum=15)

Year 1: (5/15) × 4,50,000 | Year 2: (4/15) × 4,50,000

= ₹1,50,000 | ₹1,20,000

Variables:

Remaining Life - Years left from current year

Sum of Years - Sum of all years: n(n+1)/2

Depreciable Amount - Cost minus Salvage Value

Income Tax Depreciation (Section 32)

Tax depreciation under Income Tax Act with prescribed rates.

Depreciation = Opening WDV × Prescribed Rate × (Days Used / 365)

Example:

Computer ₹1,00,000, used 200 days, 40% rate

1,00,000 × 0.40 × 1.0

= ₹40,000 depreciation

Variables:

Opening WDV - Written Down Value at year start

Prescribed Rate - IT Act rate for asset block (15-40%)

Days Used - Days asset used in business (<180 = 50% dep)

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

Business owners: Track asset value for financial reporting

Chartered Accountants: Calculate depreciation for client accounts

Tax professionals: Optimize tax deductions under Section 32

Asset managers: Plan asset replacement and budgeting

Freelancers & Professionals: Claim depreciation on equipment

May Not Need If

Salaried employees: Unless claiming home office or equipment deductions

Small asset holders: Assets below de minimis threshold (₹5,000)

Personal assets: Depreciation only applies to business/professional use

Non-depreciable assets: Land, antiques, art don't depreciate

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.

Depreciation reduces taxable income, lowering tax liability

Different asset categories have prescribed depreciation rates

Assets used for less than 180 days get 50% depreciation in first year

Common Depreciation Rates (As per IT Rules)

Computers & Software:40%

Machinery (General):15%

Furniture & Fittings:10%

Vehicles (Non-commercial):15%

Buildings:5-10%

Plant & Equipment:15-30%

Additional Depreciation (Section 32(1)(iia))

Manufacturing businesses can claim additional 20% depreciation on new plant and machinery acquired after March 31, 2005.

Total depreciation can be up to 35% in first year for eligible assets

Not applicable to cars, ships, aircraft, and office appliances

Important Tax Considerations

Asset Sale: Difference between sale price and WDV is taxable as short-term capital gain

Depreciation Method: Income Tax uses Written Down Value (WDV) method

Companies Act: May require Straight Line Method for books of accounts

Block of Assets: Depreciation calculated on entire block, not individual assets

Depreciation Tips & Best Practices

Maximize tax benefits and maintain accurate records

Maintain Records

Keep purchase invoices and bills

Maintain asset register with dates

Track disposal and sale proceeds

Purchase Timing

Buy before Sept 30 for full year depreciation

After 180 days rule - only 50% allowed

Plan asset purchases for tax efficiency

Classify Correctly

Use correct asset block per IT rules

Apply prescribed depreciation rates

Separate tangible and intangible assets

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.

Depreciation Calculator FAQs

Everything you need to know about depreciation calculation, tax benefits, and asset management

What is depreciation and why is it important for taxes?

Depreciation is the systematic allocation of an asset's cost over its useful life. It's important for taxes because under Section 32 of the Income Tax Act, depreciation is allowed as a deduction from business income, reducing your taxable income and tax liability. This helps businesses recover their asset costs over time while reducing tax burden.

Which depreciation method should I use for Income Tax in India?

For Income Tax purposes in India, you MUST use the Written Down Value (WDV) method as prescribed under the Income Tax Act. The Straight Line Method is required for Companies Act compliance (book accounting), but not accepted for IT returns. Most businesses maintain dual records - WDV for tax and SLM for books.

What is the 180-day rule for depreciation?

If an asset is purchased and put to use for less than 180 days in the financial year, you can claim only 50% of the normal depreciation rate in that year. For example, if normal depreciation is 40%, you'll get only 20% for the first year if the asset was used for less than 180 days. To get full depreciation, purchase before September 30th.

Can I claim depreciation on assets used partially for business?

Yes, but only proportionate to business use. For example, if you use a car 60% for business and 40% personally, you can claim depreciation on only 60% of the car's value. Maintain proper logs and records to substantiate the business-use percentage. This is common for freelancers and professionals working from home.

What happens when I sell an asset - how is depreciation affected?

When you sell an asset, compare the sale price with the Written Down Value (WDV). If sale price > WDV, the difference is taxable as short-term capital gain. If sale price < WDV, you can claim the loss. If you sell all assets in a block and opening WDV > sale proceeds, you get terminal depreciation as deduction.

What assets cannot be depreciated?

Land cannot be depreciated as it doesn't lose value over time. Other non-depreciable items include: stock-in-trade, personal assets not used in business, assets held as investments, antiques and art, and assets purchased for resale. Only tangible and intangible assets used in business/profession are eligible for depreciation.

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