BLOG on Income Tax Management for - AY 2022-23 & 2023-24

Rates of Depreciation under Companies Act, 2013 [ Depreciation Rate Chart]

as per Part "C" of Schedule II of the Companies Act, 2013 after making following assumptions:

The useful life to compute depreciation of the asset has been taken as per Part C of Schedule II
The residual value of an asset has been taken as 5% of the original cost of the asset

Nature of Assets

Useful LIFE

Rate [SLM]

Rate [WDV]

Buildings [NESD]

(a)

Building (other than factory buildings) RCC Frame Structure

60 Years

1.58%

4.87%

(b)

Building (other than factory buildings) other than RCC Frame Structure

30 Years

3.17%

9.50%

(c)

Factory buildings

30 Years

3.17%

9.50%

(d)

Fences, wells, tube wells

5 Years

19.00%

45.07%

(e)

Other (including temporary structure, etc.)

3 Years

31.67%

63.16%

Bridges, Culverts, Bunkers, Etc. [NESD]

30 Years

3.17%

9.50%

III

Roads [NESD]

(a)

Carpeted Roads

10 Years

9.50%

25.89%

(i)

Carpeted Roads - RCC

5 Years

19.00%

45.07%

(ii)

Carpeted Roads - other than RCC

3 Years

31.67%

63.16%

(b)

Non-carpeted roads

Plant and Machinery

(a)

General rate applicable to Plant and Machinery not covered under Special Plant and Machinery

(i)

Plant and Machinery other than continuous process plant not covered under specific

15 Years

6.3 3%

18.10%

(ii)

Continuous process plant for which no special rate has been prescribed under (ii) below

8 Years

11.88%

31.33%

(b)

Special Plant and Machinery

(i)

Plant and Machinery related to production and exhibition of Motion Picture Films

Cinematograph films - Machinery used in the production and exhibition of cinematograph films, recording and reproducing equipments, developing machines, printing machines. editing machines. synchronizers and studio lights

13 Years

7.31%

20.58%

Projecting equipment for exhibition of films

13 Years

7.3 1%

20.5 8%

(ii)

Plant and Machinery used in glass

Plant and Machinery except direct fire glass melting furnaces - Recuperative and regenerative glass melting furnaces

13 Years

7.3 1%

20.58%

Plant and Machinery except direct fire glass melting furnaces - Moulds [NESD]

8 Years

11.88%

31.23%

Float Glass Melting Furnaces [NESD]

10 Years

9.50%

25.89%

(iii)

Plant and Machinery used in mines and quarries Portable underground machinery and earth moving machinery used in open cast mining

8 Years

11.88%

31.23%

(iv)

Plant and Machinery used in Telecommunications [NESD]

Towers

18 Years

5.28%

15.33%

Telecom transceivers, switching centres, transmission and other network equipment

13 Years

7.31%

20.58%

Telecom - Ducts, Cables and optical fibre

18 Years

5.28%

15.33%

Satellites

18 Years

5.28%

15.33%

(v)

Plant and Machinery used in exploration, production and refining oil and gas [NESD]

Refineries

25 Years

3.80%

11.29%

Oil and gas assets (including wells), processing plant and facilities

25 Years

3.80%

11.29%

Petrochemical Plant

25 Years

3.80%

11.29%

Storage tanks and related equipment

25 Years

3.80%

11.29%

Pipelines

30 Years

3.17%

9.50%

Drilling Rig

8 Years

11.88%

31.23%

Field operations (above ground) Portable boilers, drilling tools, well-head tanks, etc.

8 Years

11.88%

31.23%

Loggers

8 Years

11.88%

31.23%

(vi)

Plant and Machinery used in generation, transmission and distribution of power [NESD]

Thermal /Gas/ Combined Cycle Power Generation Plant

40 Years

2.38%

7.22%

Hydro Power Generation Plant

40 Years

2.38%

7.22%

Nuclear Power Generation Plant

40 Years

2.38%

7.22%

Transmission lines, cables and other network assets

40 Years

2.38%

7.22%

Wind Power Generation Plant

22 Years

4.32%

12.73%

Electric Distribution Plant

35 Years

2.7 1%

8.20%

Gas Storage and Distribution Plant

30 Years

3.17%

9.50%

Water Distribution Plant including pipelines

30 Years

3.17%

9.50%

(vii)

Plant and Machinery used in manufacture of

Sinter Plant

20 Years

4.75%

13.91%

Blast Furnace

20 Years

4.75%

13.91%

Coke Ovens

20 Years

4.75%

13.91%

Rolling mill in steel plant

20 Years

4.75%

13.91%

Basic Oxygen Furnace Converter

25 Years

3.80%

11.29%

(viii)

Plant and Machinery used in manufacture of non-ferrous metals

Metal pot line [NESD]

40 Years

2.38%

7.22%

Bauxite crushing and grinding section

40 Years

2.38%

7.22%

Digester Section [NESD]

40 Years

2.38%

7.22%

Turbine [NESD]

40 Years

2.38%

7.22%

Equipment for Calcinations [NESD]

40 Years

2.38%

7.22%

Copper Smelter [NESD]

40 Years

2.38%

7.22%

Roll Grinder

40 Years

2.38%

7.22%

Soaking Pit

30 Years

3.17%

9.50%

Annealing Furnace

30 Years

3.17%

9.50%

Rolling Mills

30 Years

3.17%

9.50%

Equipment for Scalping, Slitting, etc. [NSED]

30 Years

3.17%

9.50%

Surface Miner, Ripper Dozer, etc. used in mines

25 Years

3.80%

11.29%

Copper refining plant [NSED]

25 Years

3.80%

11.29%

(ix)

Plant and Machinery used in medical and surgical operations [NESD]

13 Years

7.31%

20.58%

Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories thereto, medical, diagnostic equipment, namely, Cat-scan, Ultrasound Machines, ECG Monitors, etc.

13 Years

7.31%

20.58%

Other Equipment

15 Years

6.33%

l8.10%

(x)

Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD]

Reactors

20 Years

4.75%

13.9 1%

Distillation Columns

20 Years

4.75%

13.9 1%

Drying equipments / Centrifuges and Decanters

20 Years

4.75%

13.9 1%

Vessel/Storage tanks

20 Years

4.75%

13.9 1%

(xi)

Plant and Machinery used in civil construction

Concreting, Crushing, Piling Equipments and Road Making Equipments

12 Years

7.92%

22.09%

Heavy Lift Equipments—

>> Cranes with capacity more than 100 tons

20 Years

4.75%

13.91%

>> Cranes with capacity less than 100 tons

15 Years

6.33%

18.10%

Transmission line, Tunneling Equipment [NESD]

10 Years

9.50%

25.89%

Earth-moving equipments

9 Years

10.56%

28.31%

Others including Material Handling/Pipeline/Welding Equipments [NESD]

12 Years

7.92%

22.09%

(xii)

Plant and Machinery used in salt works [NESD]

15 Years

6.33%

18.10%

(V)

Furniture and Fittings [XESD]

(a)

General furniture and fittings

10 Years

9.50%

25.89%

(b)

Furniture and fittings used in hotels, restaurants and boarding houses, schools, colleges and other education institutions, libraries, welfare centres, meeting halls, cinema houses, theatres and circuses and furniture and fittings let out on hire for used on occasion of marriages and similar functions

8 Years

11.88%

31.23%

Motor Vehicles [NESD]

(a)

Motor cycles. scooters and other mopeds

10 Years

9.50%

25.89%

(b)

Motor buses, motor lorries, motor cars and motor taxies used in a business of running them on hire

6 Years

15.83%

39.30%

(c)

Motor buses, motor lorries, motor cars and motor taxies other than those used in a business of running them on

8 Years

11.88%

31.23%

(d)

Motor tractors, harvesting combines and heavy
vehicles

8 Years

11.88%

31.23%

(e)

Electrically operated vehicles including battery powered or fuel cell powered vehicles

8 Years

11.88%

31.23%

VII

Ships [NESD]

(a)

Ocean-going ships

(i)

Bulk Carriers and liner vessels

25 Years

3.80%

11 .29%

(ii)

Crude tankers, product carriers and easy chemical carriers with or without conventional

20 Years

4.75%

13.91%

(iii)

Chemicals and Acid Carriers

With Stainless steel tanks

25 Years

3.80%

11.29%

With other tanks

20 Years

4.75%

13.9 1%

(iv)

Liquefied gas carriers

30 Years

3.17%

9.50%

(v)

Conventional large passenger vessels which are used for cruise purpose also

30 Years

3.17%

9.50%

(vi)

Coastal service ships of all categories

30 Years

3.17%

9.50%

(vii)

Offshore supply and support vessels

20 Years

4.75%

13.9 1%

(viii)

Catamarans and other high speed passenger for ships or boats

20 Years

4.75%

13.9 1%

(ix)

Drill ships

25 Years

3.80%

11.29%

(x)

Hovercrafts

15 Years

6.33%

18.10%

(xi)

Fishing vessels with wooden hull

10 Years

9.50%

25.89%

(xii)

Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging

14 Years

6.79%

19.26%

(b)

Vessels ordinarily operating on inland waters

(i)

Speed boats

13 Years

7.3 1%

20.58%

(ii)

Other vessels

28 Years

3.39%

10.15%

VIII

Aircrafts or Helicopters [NESD]

20 Years

4.75%

13.91%

Railway siding. locomotives, rolling stocks, tramways and railway used by concerns, excluding railway

15 Years

6.33%

18.10%

Ropeway structures [NESD]

15 Years

6.33%

18.10%

Office equipment [NESD]

5 Years

19.00%

45.07%

XII

Computers and data processing units INESDI

(a)

Servers and networks

6 Years

15.83%

39.30%

(b)

End user devices, such as, desktops. laptops, etc.

3 Years

3 1.67%

63.16%

XIII

Laboratory equipment [NESD]

(a)

General laboratory equipment

10 Years

9.50%

25.89%

(b)

Laboratory equipments used in education institutions

5 Years

19.00%

45 .07%

XIV

Electrical Installations and Equipment [NESD]

10 Years

9.50%

25.89%

Hydraulic woks, pipelines and sluices [NESD]

15 Years

6.33%

18.10%

The useful life of an asset shall not be longer than the useful life specified in Part 'C' and the residual value of an asset shall not be more than 5% of the original cost of the asset. However, where a company uses a useful life or residual value of the asset which is different from the above limits, justification for the difference shall be disclosed in its financial statement.

Notes.—

"Factory buildings" does not include offices, godowns, staff quarters.
Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
The following information shall also be disclosed in the accounts, namely:— (i) depreciation methods used; and (ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule.
Useful life specified in Part C of the Schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.
Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Ordinarily, the residual value of an asset is often insignificant but it should generally be not more than 5% of the original cost of the asset.
The useful lives of assets working on shift basis have been specified in the Schedule based on their single shift working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be calculated on the basis of 100% for that period.
From the date this Schedule comes into effect, the carrying amount of the asset as on that date—
1. shall be depreciated over the remaining useful life of the asset as per this Schedule;
2. after retaining the residual value, shall be recognised in the opening balance of retained earnings where the remaining useful life of an asset is nil.
"Continuous process plant" means a plant which is required and designed to operate for twenty-four hours a day.

Intangible asset

For intangible assets, the provisions of the accounting standards applicable for the time being in force shall apply, except in case of intangible assets (Toll Roads) created under 'Build, Operate and Transfer', 'Build, Own, Operate and Transfer' or any other form of public private partnership route in case of road projects. Amortisation in such cases may be done as prescribed in para 3(ii) of Part A of Schedule II.

Rates of Depreciation under Companies Act, 2013 [ Depreciation Rate Chart]

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