Depreciation Rate for FY 2023-24 : Section 32 of Income Tax

Depreciation means the loss of value of asset due to its usage over the time. Depreciation under the Income Tax Act is a deduction allowed for the decrease in the value of an asset used by a taxpayer. Through this, an assessee can decrease the net income liable to be taxed for Income Tax. Depreciation can be claimed for both tangible and Intangible assets under Income Tax Act, 1961. If the the asset has been put to use for 180 days or more during the relevant previous year then full depreciation is allowed. If the asset has been put to use for less than 180 days during the year then 50% depreciation is allowed.

Depreciation rate applicable for AY 2023-24 and AY 2024-25 under Income Tax Act

Block of assets	Depreciation rate on written down value
PART A
TANGIBLE ASSETS
I. BUILDING
(1) Buildings which are used mainly for residential purposes except hotels and boarding houses	5
(2) Buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below	10
(3) Buildings acquired on or after the 1st September, 2002 for installing machinery and plant forming part of water supply project or water treatment system and which is put to use for the purpose of business of providing infra- structure facilities under section 80-IA(4)(i)	40
(4) Purely temporary erections such as wooden structures	40
II. FURNITURE AND FITTINGS
Furniture and fittings including electrical fittings, electrical wiring, switches, sockets, other fittings and fans, etc.	10
III. MACHINERY AND PLANT
(1) Machinery and plant other than those covered by sub-items (2), (3) and (8) below : [Rate of depreciation shall be 40% if conditions of Rule 5(2) are satisfied]	15
(2) (i) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st April, 1990 except those covered under entry (ii);	15
(ii) Motor cars, other than those used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st April, 2020 and is put to use before the 1st April, 2020.	30
(3) (i) Aeroplanes – Aeroengines	40
(ii) (a) Motor buses, motor lorries and motor taxis used in a business of running them on hire other than those covered under entry (b).	30
(b) Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st April, 2020 and is put to use before the 1st April, 2020.	45
(iii) Commercial vehicle which is acquired by the assessee on or after the 1st October, 1998, but before the 1st April, 1999 and is put to use for any period before the 1st April, 1999	40
(iv) New commercial vehicle which is acquired on or after the 1st October, 1998, but before the 1st April, 1999 in replacement of condemned vehicle of over 15 years of age and is put to use for any period before the 1st April, 1999	40
(v) New commercial vehicle which is acquired on or after the 1st April, 1999 but before the 1st April, 2000 in replacement of condemned vehicle of over 15 years of age and is put to use before the 1st April, 2000	40
(vi) New commercial vehicle which is acquired on or after the 1st April, 2001 but before the 1st April, 2002 and is put to use before the 1st April, 2002	40
(via) New commercial vehicle which is acquired on or after the 1st January, 2009 but before the 1st October, 2009 and is put to use before the 1st October, 2009	40
(vii) Moulds used in rubber and plastic goods factories	30
(viii) Air pollution control equipment, being— (a) Electrostatic precipitation systems (b) Felt-filter systems (c) Dust collector systems (d) Scrubber-counter current/venturi/ packed bed/cyclonic scrubbers (e) Ash handling system and evacuation system	40
(ix) Water pollution control equipment, being— (a) Mechanical screen systems (b) Aerated detritus chambers (including air compressor) (c) Mechanically skimmed oil and grease removal systems (d) Chemical feed systems and flash mixing equipment (e) Mechanical flocculators and mechanical reactors (f) Diffused air/mechanically aerated activated sludge systems (g) Aerated lagoon systems (h) Biofilters (i) Methane-recovery anaerobic digester systems (j) Air floatation systems (k) Air/steam stripping systems (l) Urea Hydrolysis systems (m) Marine outfall systems (n) Centrifuge for dewatering sludge (o) Rotating biological contractor or bio-disc (p) Ion exchange resin column (q) Activated carbon column	40
(x) (a) Solidwaste control equipments being – caustic/lime/chrome/ mineral/ cryolite recovery systems (b) Solidwaste recycling and resource recovery systems	40
(xi) Machinery and plant, used in semi-conductor industry covering all integrated circuits (ICs) (excluding hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration/very large scale integration (LSI/VLSI) as also discrete semi-conductor devices such as diodes, transistors, thyristors, triacs, etc., other than those covered by entries (viii), (ix) and (x) of this sub-item and sub-item (8) below	30
(xia) Life saving medical equipment, being— (a) D.C. Defibrillators for internal use and pace makers (b) Haemodialysors (c) Heart lung machine (d) Cobalt Therapy Unit (e) Colour Doppler (f) SPECT Gamma Camera (g) Vascular Angiography System including Digital subtraction Angiography (h) Ventilator used with anaesthesia apparatus (i) Magnetic Resonance Imaging System (j) Surgical Laser (k) Ventilators other than those used with anaesthesia (l) Gamma knife (m) Bone Marrow Transplant Equipment including silastic long standing intravenous catheters for chemotherapy (n) Fibreoptic endoscopes including Paediatric resectoscope/audit resectoscope, Peritoneoscopes, Arthoscope, Microlaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope (o) Laparoscope (single incision)	40
(4) Containers made of glass or plastic used as re-fills	40
(5) Computers including computer software [“Computer software” means any computer programme recorded on any disc, tape, perforated media or other information storage device.]	40
(6) Machinery and plant, used in weaving, processing and garment sector of textile industry, which is purchased under TUFS on or after the 1st April, 2001 but before the 1st April, 2004 and is put to use before the 1st April, 2004 [“TUFS” means Technology Upgradation Fund Scheme]	40
(7) Machinery and plant, acquired and installed on or after the 1st September, 2002 in a water supply project or a water treatment system and which is put to use for the purpose of business of providing infrastructure facility under section 80-IA(4)(i) [Machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from th e plant to the storage facility.]	40
(8) (i) Wooden parts used in artificial silk manufacturing machinery	40
(ii) Cinematograph films – bulbs of studio lights	40
(iii) Match factories – Wooden match frames	40
(iv) Mines and quarries : (a) Tubs, winding ropes, haulage ropes and sand stowing pipes (b) Safety lamps	40
(v) Salt works – Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clayey material or any other similar material	40
(vi) Flour mills – Rollers	40
(vii) Iron and steel industry – Rolling mill rolls	40
(viii) Sugar works – Rollers	40
(ix) Energy saving devices, being—
A. Specialised boilers and furnaces: (a) Ignifluid/fluidized bed boilers (b) Flameless furnaces and continuous pusher type furnaces (c) Fluidized bed type heat treatment furnaces (d) High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers)	40
B. Instrumentation and monitoring system for monitoring energy flows: (a) Automatic electrical load monitoring systems (b) Digital heat loss meters (c) Micro-processor based control systems (d) Infra-red thermography (e) Meters for measuring heat losses, furnace oil flow, steam flow, electric energy and power factor meters (f) Maximum demand indicator and clamp on power meters (g) Exhaust gases analyser (h) Fuel oil pump test bench	40
C. Waste heat recovery equipment: (a) Economisers and feed water heaters (b) Recuperators and air pre-heaters (c) Heat pumps (d) Thermal energy wheel for high and low temperature waste heat recovery	40
D. Co-generation systems: (a) Back pressure pass out, controlled extraction, extraction-cum-condensing turbines for co-generation along with pressure boilers (b) Vapour absorption refrigeration systems (c) Organic rankine cycle power systems (d) Low inlet pressure small steam turbines	40
E. Electrical equipment: (a) Shunt capacitors and synchronous condenser systems (b) Automatic power cut off devices (relays) mounted on individual motors (c) Automatic voltage controller (d) Power factor controller for AC motors (e) Solid state devices for controlling motor speeds (f) Thermally energy-efficient stenters (which require 800 or less kilocalories of heat to evaporate one kilogram of water) (g) Series compensation equipment (h) Flexible AC Transmission (FACT) devices – Thyristor controlled series compensation equipment (i) Time of Day (ToD) energy meters (j) Equipment to establish transmission highways for National Power Grid to facilitate transfer of surplus power of one region to the deficient region (k) Remote terminal units/intelligent electronic devices, computer hardware/software, router/bridges, other required equipment and associated communication systems for supervisory control and data acquisition systems, energy management systems and distribution management systems for power transmission systems (l) Special energy meters for Availability Based Tariff (ABT)	40
F. Burners: (a) 0 to 10 per cent excess air burners (b) Emulsion burners (c) Burners using air with high pre-heat temperature (above 300°C)	40
G. Other equipment: (a) Wet air oxidation equipment for recovery of chemicals and heat (b) Mechanical vapour recompressors (c) Thin film evaporators (d) Automatic micro-processor based load demand controllers (e) Coal based producer gas plants (f) Fluid drives and fluid couplings (g) Turbo charges/super-charges (h) Sealed radiation sources for radiation processing plants	40
(x) Gas cylinders including valves and regulators	40
(xi) Glass manufacturing concerns – Direct fire glass melting furnaces	40
(xii) Mineral oil concerns: (a) Plant used in field operations (above ground) distribution – Returnable packages (b) Plant used in field operations (below ground), but not including kerbside pumps including underground tanks and fittings used in field operations (distribution) by mineral oil concerns	40
(c) Oil wells not covered in clauses (a) and (b)	15
(xiii) Renewal energy devices being— (a) Flat plate solar collectors (b) Concentrating and pipe type solar collectors (c) Solar cookers, (d) Solar water heaters and systems (e) Air/gas/fluid heating systems (f) Solar crop driers and systems (g) Solar refrigeration, cold storages and air-conditioning systems (h) Solar steels and desalination systems (i) Solar power generating systems (j) Solar pumps based on solar-thermal and solar-photovoltaic conversion (k) Solar-photovoltaic modules and panels for water pumping and other applications (l) Windmills and any specially designed devices which run on wind-mills installed on or before March 31, 2012 (m) Any special devices including electric generators and pumps running on wind energy installed on or before March 31, 2012 (n) Biogas plant and biogas engines (o) Electrically operated vehicles including battery powered or fuel-cell powered vehicles (p) Agricultural and municipal waste conversion devices producing energy (q) Equipment for utilising ocean waste and thermal energy (r) Machinery and plant used in the manufacture of any of the above sub-items	40
(9) (i) Books owned by assessees carrying on a profession—
(a) Books, being annual publications	40
(b) Books, other than those covered by entry (a) above	40
(ii) Books owned by assessees carrying on business in running lending libraries	40
IV. SHIPS
(1) Ocean-going ships including dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels with wooden hull	20
(2) Vessels ordinarily operating on inland waters, not covered by sub-item (3) below	20
(3) Vessels ordinarily operating on inland waters being speed boats	20
PART B
INTANGIBLE ASSETS
Know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature not being goodwill of business of profession	25

Notes on depreciation rate on Assets

1. “Buildings” include roads, bridges, culverts, wells and tubewells.

2. A building shall be deemed to be a building used mainly for residential purposes, if the built-up floor area thereof used for residential purposes is not less than sixty-six and two-third per cent of its total built up floor area and shall include any such building in the factory premises.

3. In respect of any structure or work by way of renovation or improvement in or in relation to a building referred to in Explanation 1 of clause (ii) of sub-section (1) of section 32, the percentage to be applied will be the percentage specified against sub-item (1) or (2) of item I as may be appropriate to the class of building in or in relation to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to be applied would be such percentage as would be appropriate, as if the structure or work constituted a separate building.

4. Water treatment system includes system for desalinisation, demineralisation and purification of water.

Income Tax: How to calculate depreciation on Motor Vehicles for FY 2019-20?

5. “Electrical fittings” include electrical wiring, switches, sockets, other fittings and fans, etc.

6. “Commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”. The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “roadroller” shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

7. “Computer software” means any computer programme recorded on any disc, tape, perforated media or other information storage device.

8. “TUFS” means Technology Upgradation Fund Scheme announced by the Government of India in the form of a Resolution of the Ministry of Textiles vide No.28/1/99-CTI of 31.3.1999.

9. Machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from the plant to the storage facility.

10. “Speed boat” means a motor boat driven by a high speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometres per hour in still water and so designed that when running at a speed, it will plane, i.e., its bow will rise from the water.’