Depreciation Rates as per Income Tax Act | Depreciation Rate Chart

Depreciation Rates: The complete guide about Depreciation is as follows. Depreciation Rate Chart for AY 2016-17 helps you know the Income tax depreciation rates for various assessee types. Read the complete article and know what is Depreciation? Depreciation rates, etc. Here you can also get Depreciation rates as per Income Tax Act for most commonly used assets.

Depreciation-rates

What is Depreciation?

Depreciation as per Income Tax Act, 1962 is an allowable deduction from Business or Profession Income. In short, it has become mandatory to calculate depreciation. The decrease in value of an asset/property over a period is referred to as Depreciation. If any taxpayer has acquired and used an asset in their profession or business, he can claim depreciation during the computation of Profits and Gains of Business/Profession. For depreciation calculation or to know how to calculate depreciation, Depreciation rates are needed. The depreciation rates as per Income Tax Act for AY 2016-17, 2017-18 are as follows.

Depreciation Calculation

Depreciation calculation is done by two methods. One is as per the Companies Act i.e. for companies, the depreciation is calculated as per the provisions of Companies Act. Another method is as per Income Tax Act i.e. depreciation is calculated as per the provisions Income Tax Act. Here we have provided the Depreciation rate chart as per Income Tax Act, 1961 for AY 2016-17 which is easy for us to calculate.

Depreciation Rates AY 2003-04 onwards

Below rates of depreciation are applicable from AY 2003-04 onwards. That is, for Depreciation Rates for AY 2016-17 & Depreciation rates for AY 2017-18 also you can refer below tables. General Rate of Depreciation as per Income Tax. Check Income Tax Depreciation rates and Depreciation Rate Chart As Per Income Tax Act. Here you can also Download Depreciation Rate Chart as per Income Tax Act. Get Latest New Depreciation Rates issued by Income Tax Department. Depreciation rate chart as per income tax for 2016-17.

Income Tax  Depreciation Rates

S. No. Asset Class Asset Type Depreciation Rates
1. Building Residential buildings excluding boarding houses and hotels. 5%
Boarding houses and hotels. 10%
Purely temporary constructions like wooden structures. 100%
2. Furniture Any fittings/furniture including electrical fittings. 10%
3. Plant and machinery Taxis/Lorries/motor buses used in a business of running them on hire. 30%
Motorcars excluding those used in a business of running them on hire. 15%
Computers and computer software. 60%
Books owned by assessee carrying on a profession being annual publications. 100%
Books belonging to assessee carrying on business in running lending libraries. 100%
Books belonging to assessee carrying on profession not being annual publications. 60%
4. Intangible assets Franchise, patents, trademark, copyright, license, know-how or other commercial or business rights of similar nature. 25%

Depreciation Rates as per Income Tax Act, 1961

Depreciation Rates as per Income Tax Act, 1962 in depth are given below. The assets are two types

  1. Tangible Assets: It covers the Asset class of Building, Furniture and Plant and machinery.
  2. Intangible Assets

Part 1: Tangible Assets

Depreciation rates for tangible assets are as follows.

Income Tax Depreciation Rate Chart for Tangible Assets

Asset Class S.No. Asset Type Depreciation Rates
I. Building 1. Buildings used primarily for residential reasons (excluding boarding houses and hotels). 5%
2. Buildings apart from those used mainly for residential purposes and not covered by sub-items 1 (above) and 3 (below). 100%
3. Buildings procured on or after 1st September 2002, for installing machinery and plant forming part of water supply project or water treatment system and which is used for the business purpose of providing infrastructure facilities under clause (i) of subsection (4) of section 80-IA. 100%
4. Completely temporary erections like wooden structures. 100.00%
II. Furniture & fittings Furniture & fittings including electrical fittings. 10%
III. Plant & machinery 1. Plant & machinery excluding those covered by sub-items (2), (3) and (8) below. 15%
2. Motorcars, except those used in a business of running them on hire, procured or put to use on or after April 1, 1990. 15%
3(i) Aeroplanes – Aero Engines. 40%
3(ii) Motor buses, motor lorries and Motor taxis used in a business of running them on hire. 30%
3(iii) Commercial vehicle procured by the taxpayer on or after 1st October 1998, but before 1st April 1999, and is used for any period prior to 1st April 1999, for the profession purpose or business purpose in agreement with the third proviso to clause (ii) of sub-section (1) of section 32. 40%
3(iv) New commercial vehicle which is procured on or after 1st October 1998, but before 1st April 1999, in replacement of condemned vehicle of more than 15 years of age and is used for any period prior to 1st April 1999, for the profession purpose or business purpose in agreement with the third proviso to clause (ii) of sub-section (1) of section 32. 60%
3(v) New commercial vehicle which is procured on or after 1st April 1999, but before 1st April 2000, in replacement of condemned vehicle of more than 15 years of age and is put to use before 1st April 2000, for the profession purpose or business purpose in agreement with the 2nd proviso to clause (ii) of sub-section (1) of section 32. 60%
3(vi) New commercial vehicle procured on or after 1st April 2001, but before 1st April 2002, and is put to use before 1st April 2002, for the profession or business purpose. 50%
3(vii) Moulds used in rubber and plastic goods factories. 30%
3(viii) Air pollution control equipment

  • Felt.
  • filter system.
  • Electrostatic precipitation systems.
  • Scrubber.
  • counter current / packed bed / venture / cyclonic scrubbers.
  • Dust collector systems.
  • Evacuation system and ash handling system.
100%
3(ix) Water pollution control equipment

  • Aerated detritus chambers (including air compressor).
  • Mechanical screen systems.
  • Mechanically skimmed grease and oil removal systems.
  • Flash mixing equipment and chemical feed systems.
  • Mechanical reactors and mechanical flocculation.
  • Mechanically aerated activated sludge / diffused air systems.
  • Biofilters.
  • Aerated lagoon systems.
  • Air floatation systems.
  • Methane.
  • Recovery anaerobic digester systems.
  • Steam/air stripping systems.
  • Marine outfall systems.
  • Urea Hydrolysis systems.
  • Activated carbon column.
  • Bio.
  • disc or rotating biological contractor.
  • Marine outfall systems.
  • Ion exchanges resin column.
  • Centrifuge for dewatering sludge.
30%
3(x) (a) Solid waste, control equipments –Mineral / Cryolite /lime / chrome recovery system/ caustic.

(b) Resource recovery & solid waste recycling systems.

100%
3(xi) Plant and machinery used in semiconductor industry covering all integrated circuits (except hybrid integrated circuits) ranging from SSI to LSI / VLSI as also discrete semiconductor devices like triacs, diodes, transistors, thyristors, etc., except those covered by entries (viii), (ix), (x) of this sub-item and sub-item (8) below. 30%
3 (xi)a Life Saving medical equipment

  • D.C Defibrillators for pacemakers and internal use.
  • Haemodialysis.
  • Colour Doppler.
  • Cobalt therapy unit.
  • Heart-lung machine.
  • Vascular Angiography System including Digital Subtraction Angiography.
  • Spect Gamma Camera.
  • Ventilator used with anesthesia apparatus.
  • Magnetic Resonance Imaging System.
  • Ventilator besides those used with anesthesia.
  • Gamma knife.
  • Surgical laser.
  • The bronchoscope, video oescophago gastroscope, video oescopghago bronchoscope, fibreoptic flexible oesophago gastroscope.
  • Fiberoptic endoscopes including pediatric resectoscope/audit resectoscope, arthroscope, fiber optic flexible nasal pharyngoperitoneoscopes, micro laryngoscope, video fiber-optic flexible larynx bronchoscope.
40%
4. Containers made of plastic or glass used as refills. 50%
5. Computers including computer software. 60%
6. Plant and machinery, used in processing, weaving and garment sector of textile industry, which is bought under TUFS on or after April 1, 2001, but before April 1, 2004, and is put to use before April 1, 2004. 50%
7. Plant & machinery installed and procured on or after 1st September 2002, in a water treatment system or a water supply project and put to use for the business purpose of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA. 100%
8.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Wooden parts used in artificial silk manufacturing machinery. 100%
2. Match factories: wooden match frames.
3. Cinematograph films: bulbs of studio lights. 100%
4. Salt works – reservoirs, condensers, salt pans, etc., made of sandy, clayey, or earthy material or any other similar material. 100%
5. Quarries and mines

  • Sand stowing pipes, winding ropes, tubs, and haulage ropes.
  • Safety lamps.
100%
6. Flour mills – rollers.  80%
7. Sugar works – rollers. 80%
8. Steel and iron industry: rolling mill rolls 80%
9. Energy saving devices. 80%
(A) Furnaces and specialized boilers

  • Fluidized bed boilers / in fluid.
  • Continuous pusher type furnaces and flameless furnaces.
  • High-efficiency boilers.
  • Fluidized bed type heat treatment.
80%
(B) Instrumentation and monitoring system for monitoring energy flows

  • Digital heat loss meters.
  • Infrared thermography.
  • Automatic electrical load monitoring systems.
  • Microprocessor based control systems.
  • Exhaust gas analyzers.
  • Meters for measuring steam flow, heat losses, furnace oil flow, electric energy and power factor meters.
  • Fuel oil pumps test bench.
  • Maximum demand indicator and clamp on power meters.
80%
(C) Waste heat recovery equipment

  • Air preheaters and recuperators.
  • Feed water heaters and economizers.
  • Heat pumps.
  • Thermal energy wheel for low and high-temperature heat recovery.
80%
(D) Co-generation systems

  • Controlled extraction, extraction cum condensing turbines for cogeneration along with pressure boilers, back pressure pass out.
  • Vapor absorption refrigeration systems.
  • Organic Rankine cycle power systems.
  • Low inlet pressures small steam turbines.
80%
(E) Electrical equipment

  • Synchronous condenser systems and shunt capacitors.
  • Power factor controller for AC motors.
  • Relays (automatic power cut-off devices).
  • Solid state devices for controlling motor speeds.
  • Automatic voltage controller.
  • Thermally energy-efficient centers.
  • Flexible AC Transmission devices: Thyristor controlled series compensation equipment.
  • TOD (Time of Day) energy meters.
  • Series compensation equipment.
  • Special energy meters for ABT (Availability Based Tariff).
  • Intelligent electronic devices/remote terminal units, computer software/hardware, bridges/router, other required equipment and associated communication systems for data acquisition systems and supervisory control, distribution management systems and energy management systems for power transmission systems.
80%
(F) Burners

  • 0 to 10 % excess air burners.
  • Emulsion burners.
  • Burners using air with high preheat temperature (i.e. above 300 degrees Celsius).
80%
(G) Other equipment

  • Mechanical vapor compressors.
  • Thin film evaporators.
  • Wet air oxidation equipment for recovery of heat and chemicals.
  • Fluid couplings and fluid drives.
  • Automatic microprocessor based load demand controllers.
  • Coal based producer gas plants.
  • Sealed radiation sources for radiation processing plants.
  • Super-charges/turbo charges.
80%
10. Gas cylinders including regulators and valves. 60%
11. Glass manufacturing concerns being – Direct fire glass melting furnaces. 60%
12. Mineral oil concerns

  • Plant used in field operations (above ground) distribution – returnable packages.
  • The plant used in field operations (below ground), but not including kerbside pumps including fittings and tanks used in field operations (distribution) by mineral oil concerns.
60%
13. Renewable energy devices

  • Pipe type and concentrating solar collectors.
  • Solar cookers.
  • Flat plate solar collectors.
  • Air/fluid/gas heating systems.
  • Solar crop drivers and systems.
  • The Solar water heaters and systems.
  • Solar refrigeration, cold storages & air conditioning systems.
  • Desalination systems & Solar steels.
  • Solar power generating systems.
  • Solar-photovoltaic modules and panels for water pumping & other applications.
  • Solar pumps based on solar-photovoltaic and solar-thermal conversion.
60%
14. Windmills and any other specially designed devices that operate on windmills (installed on or after April 1, 2014). 80%
15. Any special devices including electric pumps and generators operating on wind energy (installed on or after April 1, 2014). 80%
16. Books belonging to assessees carrying on a profession.
(i) Books, being annual publications. 100%
(ii) Books, excluding those covered by entry (i) above. 60%
(iii) Books owned by assessees carrying on business in running lending libraries. 100%
IV. Ships 4(i) Ocean-going ships including survey launches, tugs, dredgers, barges, and other similar ships used mainly for sighing vessels with wooden hull and dredging purposes.  20%
4(ii) Vessels ordinarily working on inland waters, not covered by below sub-item (iii). 20%
4(iii) Vessels ordinarily operating on inland waters being speed boats. 20%

Part 2: Intangible Assets

Check out the rate of Depreciation as per Income tax for Intangible assets are as follows.

Income Tax Depreciation Rate as per Income Tax

Asset Class Asset Type Depreciation Rates
Intangible assets Franchise, patents, trademark, copyright, license, know-how or other commercial or business rights of similar nature. 25%

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