Our free depreciation calculator helps businesses accurately determine the declining value of their assets over time. Calculate depreciation using either the Straight Line Method (SLM) or Written Down Value (WDV) as per the Income Tax Act and Companies Act in India.
Asset depreciation is essential for tax planning, financial reporting, and understanding the true value of your business assets. This calculator provides instant results with detailed year-by-year breakdowns and visual charts.
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Year | Opening Value | Depreciation | Closing Value |
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Total | - | 0.00 | - |
Depreciation represents the reduction in an asset's value due to usage, wear and tear, obsolescence, or market changes. In India, companies must calculate depreciation for both accounting purposes (Companies Act) and tax purposes (Income Tax Act).
There are two primary methods of calculating depreciation in India:
In the SLM method, depreciation is calculated as a fixed percentage of the original cost of the asset each year. This results in equal depreciation expenses throughout the asset's useful life.
Formula: Depreciation = (Original Cost × Rate of Depreciation) / 100
Best for: Assets that decline in value evenly over time
In the WDV method, depreciation is calculated on the reducing balance (book value) of the asset. This results in higher depreciation in earlier years and lower in later years.
Formula: Depreciation = (Opening WDV × Rate of Depreciation) / 100
Best for: Assets that lose value more rapidly in early years
The Income Tax Act mandates specific depreciation rates for different classes of assets. Key features include:
The Companies Act allows businesses to choose between SLM and WDV methods for financial reporting. The useful life of assets is prescribed in Schedule II of the Companies Act, 2013.
Asset Type | Depreciation Rate (WDV) |
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Residential Buildings | 5% |
Commercial Buildings | 10% |
Furniture and Fittings | 10% |
Plant and Machinery | 15% |
Computers and Software | 40% |
Motor Vehicles | 15% (Commercial), 20% (Personal) |
Intangible Assets | 25% |
The Income Tax Act provides additional depreciation benefits to encourage investment in new plant and machinery:
The calculator will display a summary of the initial value, total depreciation, final value, and percentage value reduction. You'll also see a detailed year-by-year breakdown table and a visual chart showing the depreciation pattern over time.
Frequently Asked Questions (FAQs)
The Straight Line Method (SLM) applies depreciation equally over the asset's useful life based on the original cost. The Written Down Value (WDV) method calculates depreciation on the reducing balance, resulting in higher depreciation in earlier years and lower in later years.
Additional depreciation is applicable only for new plant and machinery acquired and installed by a manufacturing business or a power generation/distribution business. It does not apply to office equipment, vehicles, or second-hand assets.
The half-year rule stipulates that if an asset is purchased and put to use for less than 180 days in a financial year, only 50% of the regular depreciation can be claimed for that year. The full rate applies in subsequent years.
According to accounting principles and the Income Tax Act, it's common practice to maintain a nominal value (typically ₹1) in the books for fully depreciated assets that are still in use. This helps maintain record of the asset while acknowledging it has been fully depreciated for tax purposes.
The WDV method typically provides higher tax savings in the initial years because it allows for larger depreciation deductions early in the asset's life. However, for income tax purposes in India, you must follow the prescribed method (generally WDV) and rates specified in the Income Tax Act, regardless of which method might provide more savings.
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