Income Tax Act, 2025 · IT Rules, 2026
Depreciation Rates
Under Income Tax Act, 2025
Complete rate chart as per Section 34 of the Income Tax Act, 2025 read with Rule 25 and Appendix I of the Income Tax Rules, 2026. Written Down Value (WDV) method. Effective from Tax Year 2026-27 (1 April 2026 onwards).
58+Asset Types
10Rate Slabs
WDVMethod
5Categories
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What's New under ITA 2025 / IT Rules 2026: (1) Depreciation now governed by Section 34 (previously Section 32 of ITA 1961). (2) 40% depreciation cap introduced for taxpayers opting for the concessional tax regime under Sections 199(3), 200(5), or 202(2) of ITA 2025. (3) Batteries at 33.40% — a new rate specifically introduced to incentivise energy storage and EV infrastructure. (4) Existing WDV balances as on 31 March 2026 carry forward to Tax Year 2026-27 without adjustment. All other rates are unchanged from the old regime.
📐 WDV Method
Depreciation is calculated on the Written Down Value of the entire block, not individual assets. All assets at the same rate form one block. WDV = Opening WDV + Additions − Disposals.
⏱️ 180-Day Rule
If an asset is put to use for less than 180 days in the year of acquisition, only 50% of the normal rate is allowed for that year. Full rate from next year.
⚡ Additional Depreciation
Extra 20% of actual cost is allowed on new plant & machinery (not second-hand) acquired by manufacturing or power generation businesses — over and above normal depreciation.
🔝 40% Cap (2026 New)
Taxpayers opting for the concessional tax regime (Sec 199(3)/200(5)/202(2)) cannot claim depreciation exceeding 40% — capping rates for high-rate assets.
⚡ Power Sector Option
Undertakings engaged in power generation or distribution may opt for the Straight-Line Method (SLM) using Appendix II rates — irrevocably, before filing the first return.
🚫 Not Eligible
Land and Goodwill (as per ITA 2025) are NOT eligible for depreciation. Assets paid for in cash exceeding ₹10,000 per day per person are also not eligible.
ALL
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Assets
Assets
5%
Residential
Buildings
Buildings
10%
Buildings &
Furniture
Furniture
15%
General
P&M
P&M
20%
Ships &
Vessels
Vessels
25%
Intangible
Assets
Assets
30%
Hire
Vehicles
Vehicles
40%
Computers
& Energy
& Energy
60%
Prof.
Books
Books
80%
Windmills
/ Rollers
/ Rollers
100%
Pollution
Control
Control
| Sl. | Rate | Category | Asset Description | Condition / Note |
|---|---|---|---|---|
| 1 | 5% | Buildings | Residential buildings (except hotels & boarding houses) | Used mainly for residential purposes |
| 2 | 10% | Buildings | Buildings other than residential (commercial, office, factory, shops) | All non-residential buildings not covered elsewhere |
| 3 | 40% | Buildings | Purely temporary erections (wooden structures, site offices) | Must be purely temporary in nature |
| 4 | 100% | Buildings | Buildings for water supply / water treatment projects (infrastructure) | Used for providing infrastructure facilities u/s 80-IA type projects |
| 5 | 10% | Furniture | Furniture and fittings including electrical fittings | Covers office furniture, fans, fixtures, electrical installations |
| 6 | 15% | Plant & Machinery | General Plant & Machinery (not covered elsewhere) | Default rate for all P&M not specifically classified |
| 7 | 15% | Plant & Machinery | Motor cars — not used in business of running them on hire (acquired after 01.04.1990) | Personal / business-use cars; not for hire |
| 8 | 30% | Plant & Machinery | Motor buses, motor lorries and motor taxis — used in business of running on hire | For hire/transport operators only; not personal vehicles |
| 9 | 45% | Plant & Machinery | New commercial vehicle acquired between 01.10.2018 and 31.03.2019 (used in hire business) | Special accelerated rate; specific acquisition window only |
| 10 | 30% | Plant & Machinery | Battery-operated electric vehicles / three-wheelers | Covers e-rickshaws, electric scooters, electric delivery vehicles |
| 11 | 40% | Plant & Machinery | Computers and computer software (including servers, laptops, peripherals) | Covers all IT hardware and software; reflects rapid obsolescence |
| 12 | 40% | Plant & Machinery | Aeroplanes, helicopters and aero-engines | All types of aircraft including helicopters |
| 13 | 80% | Plant & Machinery | Windmills and special devices for generating electricity through wind energy (installed before 01.04.2012) | Higher rate for pre-2012 installed wind assets only |
| 14 | 40% | Plant & Machinery | Windmills and special devices for wind energy (installed on or after 01.04.2012) | Rate reduced for post-2012 wind assets |
| 15 | 40% | Plant & Machinery | Renewable energy devices: Solar, geothermal, biogas, tidal energy equipment | All non-conventional / renewable energy devices |
| 16 | 40% | Plant & Machinery | Energy-saving devices: Furnaces, boilers, waste heat recovery systems, co-generation systems, electric equipment, burners | Covers specified energy-saving industrial equipment |
| 17 | 33.40% | Plant & Machinery | Batteries (for energy storage, EV infrastructure)NEW 2026 | New rate under ITA 2025 / IT Rules 2026 — incentivising energy storage solutions and EV ecosystem |
| 18 | 100% | Plant & Machinery | Air pollution control equipment (including particulate collection systems) | Electrostatic precipitators, scrubbers, filters, dust collection systems |
| 19 | 100% | Plant & Machinery | Water pollution control equipment (ETP / STP) | Effluent treatment plants, sewage treatment systems, sludge handling |
| 20 | 100% | Plant & Machinery | Solid waste control equipment (composting, recycling systems) | Municipal and industrial solid waste management equipment |
| 21 | 40% | Plant & Machinery | Life-saving medical equipment (EECP, Defibrillator, Heart-lung machine, Haemodialysis machine, etc.) | Specifically listed life-saving equipment in hospitals |
| 22 | 15% | Plant & Machinery | General medical and surgical equipment, instruments (not life-saving) | X-ray machines, ECG, surgical tables, examination equipment |
| 23 | 30% | Plant & Machinery | Plant and machinery used in the semiconductor industry | Chip manufacturing, wafer processing, fabrication equipment |
| 24 | 80% | Plant & Machinery | Rollers used in flour mills (steel / rubber rollers) | High wear-and-tear item; accelerated rate |
| 25 | 15% | Plant & Machinery | Machinery used in sugar works | Sugar crushing, refining and boiling plant |
| 26 | 40% | Plant & Machinery | Textile machinery purchased under TUFS (01.04.2001 to 01.04.2004, put to use before 01.04.2004) | Specific to TUFS scheme acquisition window |
| 27 | 15% | Plant & Machinery | Printing machines (general printing presses) | Letterpress, offset, digital printing machines — general category |
| 28 | 15% | Plant & Machinery | Plastic moulding machinery (injection, blow, compression moulding) | General P&M rate applies to plastic processing industry |
| 29 | 15% | Plant & Machinery | Machine tools (lathes, drilling, milling, boring, grinding machines) | Standard engineering workshop equipment |
| 30 | 15% | Plant & Machinery | Refrigeration and air-conditioning equipment (plant use) | Industrial refrigeration, factory AC — general P&M rate |
| 31 | 15% | Plant & Machinery | Electrical machinery — transformers, diesel generators, switchgear | General P&M rate; captive power generation not for distribution |
| 32 | 15% | Plant & Machinery | Material handling equipment: conveyors, forklifts, cranes, hoists | Factory / warehouse material handling; general P&M rate |
| 33 | 15% | Plant & Machinery | Pumps, compressors, fans, blowers (general industrial use) | General P&M rate; not covered under special categories |
| 34 | 40% | Plant & Machinery | Plant and machinery installed in water supply / water treatment projects (infrastructure, Sec 80-IA) | Acquired on or after 01.09.2002 for infrastructure water projects |
| 35 | 15% | Plant & Machinery | Plant and machinery used in mineral oil concerns (general) | General drilling, extraction equipment — non-specific rate |
| 36 | 40% | Plant & Machinery | Plant and machinery used for oil and natural gas exploration (offshore / well casing) | Higher rate for high-risk offshore exploration equipment |
| 37 | 100% | Plant & Machinery | Books — annual publications owned by professionals | Professional directories, annuals — full write-off in year of purchase |
| 38 | 60% | Plant & Machinery | Books — other than annual publications, owned by professionals for professional use | Reference books, law books, technical books used in profession |
| 39 | 100% | Plant & Machinery | Books owned by assessees running lending libraries | All books in lending libraries — full write-off annually |
| 40 | 15% | Plant & Machinery | Mobile handsets, telephones (business use) | General P&M rate applies; not classified under computers |
| 41 | 15% | Plant & Machinery | Telecom network equipment — routers, switches, OFC cables | General P&M rate; not classified under computers |
| 42 | 15% | Plant & Machinery | Plant and machinery used in generation and distribution of power (general, WDV method) | When WDV method is retained; SLM Appendix II available as option |
| 43 | 15% | Plant & Machinery | Construction equipment: excavators, bulldozers, road rollers, compactors | General P&M rate; heavy earthmoving and construction machinery |
| 44 | 20% | Ships | Ocean-going ships, dredgers, barges, wooden-hull fishing vessels | All ocean-going / deep-sea vessels |
| 45 | 20% | Ships | Vessels ordinarily operating on inland waters (ferries, river vessels) | Inland waterways vessels operating within India |
| 46 | 20% | Ships | Speed boats (motorised fast craft) | Pleasure, patrol, and utility speed boats |
| 47 | 25% | Intangible | Know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature | Acquired on or after 01.04.1998; Goodwill NOT eligible (per ITA 2025) |
| 48 | 15% | Plant & Machinery | Furniture and fittings in hotels and boarding houses (kitchen equipment, refrigerators, etc.) | Hotel-specific: higher wear rate — classified under P&M not furniture |
| 49 | 15% | Plant & Machinery | Cinematograph films, projectors, cinema theatre equipment | Entertainment industry equipment; general P&M rate |
| 50 | 40% | Plant & Machinery | Biogas plants and devices for generating energy from biowaste/biomass | Non-conventional / renewable energy devices |
| 51 | 15% | Plant & Machinery | Scientific apparatus, laboratory instruments, measuring equipment | R&D equipment, lab instruments, testing apparatus |
| 52 | 15% | Plant & Machinery | Office equipment — photocopiers, scanners, duplicators (not computers) | General P&M rate; distinguished from computers at 40% |
| 53 | 15% | Plant & Machinery | Agricultural machinery: tractors, threshers, harvesters, irrigation pumps | Farm mechanisation equipment; general P&M rate |
| 54 | 15% | Plant & Machinery | Steel safes, vaults and lockers (used in business) | Security equipment — classified as P&M not furniture |
| 55 | 15% | Plant & Machinery | Fire fighting equipment (extinguishers, hydrant systems, sprinklers) | Safety equipment for factory / commercial premises |
| 56 | 100% | Plant & Machinery | Books (annual publications) — including newspapers and periodicals for professional use | Same as annual publications rule |
| 57 | 15% | Plant & Machinery | Storage tanks, pressure vessels, silos and storage containers (industrial) | General P&M rate for industrial storage infrastructure |
| 58 | 15% | Plant & Machinery | Pipes, pipelines, ducts and cable trays (installed in factories / industrial premises) | General P&M rate; infrastructure within factory premises |
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Key Rules & Important Notes
Closing WDV = Opening WDV + Cost of Assets Acquired during year − Sale proceeds of assets sold during year
Depreciation is then applied to this Closing WDV at the prescribed Appendix I rate. Key rules:
Depreciation is then applied to this Closing WDV at the prescribed Appendix I rate. Key rules:
- If all assets in a block are sold: excess of sale proceeds over Opening WDV is a short-term capital gain (balancing charge); shortfall is a terminal loss
- If sale proceeds exceed Opening WDV + Cost of additions: taxable as STCG
- Individual assets lose their identity once added to the block
- Depreciation is mandatory — WDV is reduced even if depreciation is not claimed
If an asset is purchased and put to use for less than 180 days in the year of acquisition, only 50% of the normal depreciation rate is allowed for that year. From the second year onwards, the full rate applies on the WDV.
Example: A computer (40%) purchased and put to use on 1 February 2027 (Tax Year 2026-27) — used for only ~58 days (less than 180 days). Allowed depreciation = 20% (50% of 40%) in Tax Year 2026-27. From Tax Year 2027-28, full 40% on closing WDV.
Important: The 180-day rule is based on the date of actual use, not the purchase date. Keep commissioning certificates / invoices with commissioning date.
Example: A computer (40%) purchased and put to use on 1 February 2027 (Tax Year 2026-27) — used for only ~58 days (less than 180 days). Allowed depreciation = 20% (50% of 40%) in Tax Year 2026-27. From Tax Year 2027-28, full 40% on closing WDV.
Important: The 180-day rule is based on the date of actual use, not the purchase date. Keep commissioning certificates / invoices with commissioning date.
Additional Depreciation is an extra 20% of actual cost of new plant and machinery (not buildings, vehicles, software, or furniture) acquired by:
180-day rule applies: If put to use for less than 180 days, only 50% of the additional depreciation (i.e., 10%) is allowed in year 1; remaining 10% is carried to year 2.
Under ITA 2025: Additional depreciation continues under Section 34(1)(iii) — verify section mapping with the updated concordance table.
- Manufacturing businesses (any industrial manufacture or production)
- Power generation / distribution businesses
- Refining of mineral oil businesses
180-day rule applies: If put to use for less than 180 days, only 50% of the additional depreciation (i.e., 10%) is allowed in year 1; remaining 10% is carried to year 2.
Under ITA 2025: Additional depreciation continues under Section 34(1)(iii) — verify section mapping with the updated concordance table.
Rule 25 of IT Rules 2026 introduces a maximum 40% depreciation cap for taxpayers who have opted for the concessional tax rate regime under:
- Section 199(3) — New domestic manufacturing companies
- Section 200(5) — Domestic companies opting for 22% concessional rate
- Section 202(2) — Other specified concessional regime taxpayers
Not eligible for depreciation under ITA 2025:
- Land — No depreciation on land under any circumstances
- Goodwill — Specifically excluded under ITA 2025 (aligned with Supreme Court ruling in Smifs Securities case context)
- Assets paid for in cash exceeding ₹10,000 per day per person are not eligible
- Intangible assets acquired before 01.04.1998 are not eligible for the 25% depreciation
- Assets used for non-business purposes — proportionate disallowance applies
Depreciation — Income Tax Act
Block of assets · WDV Method · All asset categories · Half-year convention
📌 Block of Assets Concept: All assets of same type & rate form one block. WDV method applies.
If asset is used for < 180 days in year of purchase, only 50% depreciation is allowed.
