Depreciation Calculator — IT Act WDV & Companies Act SLM/WDV
Depreciation is how you spread the cost of an asset across the years you use it — both an accounting rule and a tax benefit. Under the Income Tax Act 1961, depreciation uses a WDV block-of-assets approach at rates in Appendix I of the IT Rules. Under Companies Act 2013, Schedule II prescribes useful lives; companies use SLM or WDV with a 5% residual. The two methods give different year-by-year figures. This tool builds the full schedule under either law — or both side-by-side.
How to use
- Enter the Asset Cost — the amount at which the asset was put to service (actual cost for IT Act; original cost for Companies Act).
- Select the Depreciation Mode — IT Act (WDV), Companies Act, or Compare Both.
- IT Act mode: Select an asset class from the preset list (auto-fills the WDV rate) or enter a custom rate. Enter the number of years to project. Optionally enter the put-to-use date for the s.32 half-rate proviso, and tick the additional depreciation checkbox (s.32(1)(iia)) if applicable.
- Companies Act mode: Select an asset class from the Schedule II preset list (auto-fills useful life and 5% residual) or enter custom values. Choose SLM or WDV method.
- Compare mode: Both panels appear side-by-side so you can see how each method treats the same asset.
- Click Calculate Depreciation. The result shows KPIs and a year-by-year schedule.
How it works
IT Act — Written Down Value (block of assets)
Source: Income Tax Act 1961, s.32; Appendix I, Income Tax Rules 1962 — incometaxindia.gov.in
Annual depreciation = Opening WDV × Rate
Each asset class belongs to a block. The tool computes a single-asset schedule assuming the asset's WDV is the full block for simplicity:
Year 1 dep = Cost × Rate
Year 2 dep = (Cost − Year 1 dep) × Rate
...
s.32 proviso — half-rate: If the put-to-use date falls after 30 September (i.e., fewer than 180 days remain in the financial year of acquisition), only half the rate applies in Year 1.
s.32(1)(iia) — additional depreciation: 20% of actual cost is added to Year 1 depreciation for new manufacturing plant and machinery. Halved to 10% if put to use for fewer than 180 days. Not available under ss.115BAA / 115BAB.
Companies Act 2013 — Schedule II
Source: Companies Act 2013, Schedule II — mca.gov.in
SLM: Annual depreciation = (Cost − Residual) ÷ Useful Life (constant each year).
WDV: Rate = 1 − (Residual ÷ Cost)^(1 ÷ Life); depreciation = Opening WDV × Rate each year.
The book value at the end of the useful life converges to the residual value (5% of cost).
Worked example (tool output: ₹5,00,000 computer, IT Act WDV)
| Input | Value |
|---|---|
| Asset Cost | ₹5,00,000 |
| Asset Class | Computers and computer software (40% WDV) |
| Mode | IT Act WDV |
| Put-to-use date | 1 April 2025 (≥180 days in FY 2025–26) |
| Additional depreciation | Not claimed |
Year-by-Year Schedule (from tool):
| Year | Opening Book Value | Depreciation (40%) | Closing Book Value |
|---|---|---|---|
| 1 | ₹5,00,000 | ₹2,00,000 | ₹3,00,000 |
| 2 | ₹3,00,000 | ₹1,20,000 | ₹1,80,000 |
| 3 | ₹1,80,000 | ₹72,000 | ₹1,08,000 |
| 4 | ₹1,08,000 | ₹43,200 | ₹64,800 |
| 5 | ₹64,800 | ₹25,920 | ₹38,880 |
Worked example (tool output: ₹5,00,000 computer, Companies Act SLM)
| Input | Value |
|---|---|
| Asset Class | Computers — end-user devices (3-year useful life, 5% residual) |
| Method | SLM |
Annual depreciation = (5,00,000 − 25,000) ÷ 3 = ₹1,58,333 per year.
| Year | Opening | Depreciation | Closing |
|---|---|---|---|
| 1 | ₹5,00,000 | ₹1,58,333 | ₹3,41,667 |
| 2 | ₹3,41,667 | ₹1,58,333 | ₹1,83,334 |
| 3 | ₹1,83,334 | ₹1,58,334 | ₹25,000 (residual) |
Under Companies Act, the computer is fully written down to its residual value in 3 years.
Reference: asset class rates and useful lives
IT Act Appendix I rates (Income Tax Rules 1962)
Source: Appendix I, Income Tax Rules 1962 — incometaxindia.gov.in
| Asset Class | WDV Rate |
|---|---|
| Residential buildings | 5% |
| Other buildings (factory, commercial) | 10% |
| Furniture and fittings (including electrical) | 10% |
| Plant and machinery — general | 15% |
| Motor cars (not on hire) | 15% |
| Motor vehicles on hire (taxis, buses, lorries) | 30% |
| Computers and computer software | 40% |
| Aircraft and aero-engines | 40% |
| Intangibles (patents, trademarks, copyrights, licences) | 25% |
Companies Act 2013 Schedule II useful lives
Source: Schedule II, Companies Act 2013 — mca.gov.in
| Asset Class | Useful Life | Residual Value |
|---|---|---|
| Buildings (other than factory) | 30 years | 5% |
| Factory buildings | 30 years | 5% |
| Furniture and fittings | 10 years | 5% |
| Plant and machinery — general | 15 years | 5% |
| Computers — servers and networks | 6 years | 5% |
| Computers — end-user devices | 3 years | 5% |
| Office equipment | 5 years | 5% |
| Motor vehicles | 8 years | 5% |
Tips
Use Compare mode to identify the timing difference. IT Act WDV and Companies Act depreciation diverge significantly for high-rate assets like computers (40% vs 3-year SLM). Companies often claim higher tax deductions in early years via IT Act WDV while showing a smoother expense profile in their P&L.
The half-rate proviso matters for year-end purchases. Buying capital assets before 1 October maximises Year 1 depreciation. Assets acquired after 30 September attract only half the WDV rate for that financial year.
Additional depreciation requires eligibility check. s.32(1)(iia) is only available to manufacturers and producers, and only on new assets (not second-hand). It cannot be claimed under s.115BAA or s.115BAB concessional regimes. The tool's eligibility note spells this out.
For block calculations, assets are pooled. If you add a second computer to an existing block mid-year, the block WDV increases. The tool treats one asset as the full block for simplicity; for multi-asset blocks, adjust the opening WDV manually.
Sources
- Income Tax Act 1961, s.32 (depreciation, block of assets, additional depreciation) — incometaxindia.gov.in
- Income Tax Rules 1962, Appendix I (depreciation rates by asset class) — incometaxindia.gov.in
- Companies Act 2013, Schedule II (useful lives and residual values) — mca.gov.in
- Income Tax Act 1961, ss.115BAA and 115BAB (concessional regimes, no additional depreciation) — incometaxindia.gov.in
Last updated: October 2026
Frequently Asked Questions
- What is the difference between IT Act WDV and Companies Act depreciation?
- Under the Income Tax Act 1961, depreciation is computed on a 'block of assets' using the Written Down Value (WDV) method at rates prescribed in Appendix I of the Income Tax Rules 1962. For Companies Act 2013, Schedule II prescribes the useful life of each asset class; companies then apply either SLM or WDV using that life and a 5% residual value. The two methods often give different year-by-year figures — use the Compare mode to see both schedules side-by-side.
- What is the WDV method and how does it differ from SLM?
- WDV (Written Down Value) applies a fixed percentage to the current book value each year, so depreciation is highest in early years and tapers off. SLM (Straight Line Method) charges an equal amount each year: (Cost − Residual) ÷ Useful Life. WDV accelerates the write-off, which is beneficial for tax purposes; SLM is simpler and common in financial reporting.
- What is the 'half-rate' proviso under the Income Tax Act?
- Under the proviso to s.32(1) of the Income Tax Act 1961, if an asset is put to use for fewer than 180 days in the financial year of acquisition, only half the WDV rate is allowed for that year. For example, a computer (40% WDV) bought and put to use after 30 September in an FY will attract only 20% in Year 1.
- What is additional depreciation under s.32(1)(iia)?
- An additional 20% depreciation on the actual cost of new plant and machinery is allowed in the year of acquisition under s.32(1)(iia) of the Income Tax Act 1961, for assets used in manufacturing or production. If the asset is put to use for fewer than 180 days in that year, only 10% (half) is allowed. Additional depreciation is not available under the concessional tax regimes in ss.115BAA and 115BAB.
- What residual value does Schedule II require under the Companies Act?
- Schedule II to the Companies Act 2013 states that residual value shall not be more than 5% of the original cost of the asset. This 5% is used as the residual (scrap) value in SLM and WDV calculations under the Companies Act.
- How does the tool calculate the Companies Act WDV rate?
- The WDV rate under Companies Act is derived from the Schedule II useful life and the 5% residual value using the formula: Rate = 1 − (Residual Value ÷ Cost)^(1 ÷ Life). For a 10-year asset with 5% residual: Rate = 1 − (0.05)^(0.1) ≈ 25.89%.
- Can I use the IT Act WDV rates for Companies Act reporting?
- No. For statutory financial statements under the Companies Act 2013, you must follow Schedule II useful lives. The IT Act WDV rates apply only to computing depreciation for income tax purposes. The two computations run in parallel — this is why companies maintain separate tax books and financial accounting books.
- What is a 'block of assets' under the Income Tax Act?
- A block of assets is a group of assets of the same nature and the same depreciation rate. For example, all general plant and machinery (15%) forms one block. The WDV of the entire block is computed as: Opening WDV + Additions − Disposals. Depreciation is applied to this pooled WDV, not to each asset individually.