The complete guide about Depreciation is as follows. Depreciation Rate Chart for AY 2016-17 helps you know the Rates of depreciation for various assessee types. Read the complete article and know what is Depreciation, depreciation rates, etc.
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 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.
Income Tax Depreciation Rates applicable from the 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
|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, 1962
Depreciation Rates as per Income Tax Act, 1962 in depth are given below. The assets are two types
- Tangible Assets: It covers the Asset class of Building, Furniture and Plant and machinery.
- Intangible Assets
Part 1: Tangible Assets
Depreciation rates for tangible assets are as follows.
|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
|3(ix)||Water pollution control equipment
|3(x)||(a) Solid waste, control equipment’s –
Mineral / Cryolite /lime / chrome recovery system/ caustic.
(b) Resource recovery & solid waste recycling systems.
|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
|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%|
|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
|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 specialised boilers
|(B) Instrumentation and monitoring system for monitoring energy flows
|(C) Waste heat recovery equipment
|(D) Co-generation systems
|(E) Electrical equipment
|(G) Other equipment
|10. Gas cylinders including regulators and valves||60%|
|11. Glass manufacturing concerns being – Direct fire glass melting furnaces||60%|
|12. Mineral oil concerns
|13. Renewable energy devices
|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
Depreciation rates for Intangible assets are as follows.
|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%|