• Jan
  • 21
  • 2009

Commercial Vehicle Acquired b/w 01.01.2009 to 31.03.2009 will be eligible to depreciation @ 50%

INCOME-TAX (THIRD AMENDMENT) RULES, 2009 – AMENDMENT IN NEW APPENDIX 1

NOTIFICATION NO. 10/2009, DATED 19-1-2009

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (Third Amendment) Rules, 2009

(2) They shall come into force on the 1st day of April, 2009.

2. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating to TANGIBLE ASSETS, under the heading III. MACHINERY AND PLANT, in item (3), after sub-item (vi) and entries relating thereto, the following shall be inserted, namely:—

“(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table]  50”.

Income Tax – 50% Depreciation for New Motor Vehicles

The CBDT has amended the Table to the New Appendix-I prescribing the Rates at which depreciation is admissible. Now new commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession , will get 50% depreciation.

  • “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 “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

And the Motor Vehicles Act defines these as,

  • “heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road – roller the unladen weight of either of which, exceeds 12,000 kilograms;
  • “heavy passenger motor vehicle” means any public service vehicle or private service vehicle or educational institution bus or omnibus the gross vehicle weight of any of which, or a motor car the unladen weight of which, exceeds 12,000 kilograms;
  • “light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road – roller the unladen weight of any of which, does not exceed 6,000 kilograms;
  • “medium goods vehicle” means any goods carriage other than a light motor vehicle or a heavy goods vehicle;
  • “medium passenger motor vehicle” means any public service vehicle or private service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle;
  • ” maxicab ” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward;
  • “motorcab” means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driving for hire or reward;
  • “tractor” means a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road – roller;
  • And the Act does not define Road-roller.

FURTHER CLARIFICATION ON ABOVE

There has been an increase in depreciation for commercial vehicles from 40 per cent to 50 per cent. Such depreciation is available both for business and profession. Would it mean that the assessees engaged in professions such as law, medicine and audit would be eligible for 50 per cent deduction for depreciation for cars used for profession? Commercial vehicle should ordinarily mean any vehicle used for the purpose of commerce which will include profession. But “commercial vehicle” is understood in the Notes to the Depreciation Schedule as under:

“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 “road-roller” shall have the meanings respectively assigned to them in Sec. 2 of the Motor Vehicles Act, 1988 (59 of 1988).”

The above definition would include light vehicles as well. In fact, passenger cars used by the tourism industry should qualify as commercial vehicles, when they are licensed as public transport.

Notwithstanding such persuasive arguments, one has to bear in mind the classification in the Appendix prescribed under Rule 5 in pursuance of Sec. 32(1) for purposes of understanding the entry. Entries under Item III of Part A of the Appendix are relevant in this context. Entry 2 for which the prescribed rate is 15 per cent reads as under:

“(2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after April 1, 1990.”

Entry 3(ii) for which the prescribed rate of depreciation is 30 per cent reads as under:

“(ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire.” It may, therefore, be seen that motor cars qualify for depreciation at 20 per cent unless run on hire to merit depreciation at 30 per cent. Entry 3(via) as now inserted by the Income-tax (Third Amendment) Rules, 2009, reads: “(via) New commercial vehicle which is acquired on or after January 1, 2009, but before April 1, 2009, and is put to use before April 1, 2009, for purposes of business or profession, [See paragraph 6 of the Notes below this Table]”.

In the light of the definition of commercial vehicles reproduced earlier and reading the entries harmoniously, it would mean that commercial vehicles referred are other than cars falling under Entry 2 and 3(ii). The amendment to the rule is obviously intended to cover only trucks and other heavy vehicles, besides other commercial vehicles hitherto entitled to depreciation at 30 per cent.

So Depreciation Rate will be as Follows for Commercial Vehicles

Product Depreciation rate

(if purchased on or  before 30th September 2008)

Depreciation rate

(if purchased after 30th September up to 31st December 2008)


Depreciation rate(if purchased on or after 1st Jan 09 to 31st March 09)
Commercial Vehicle 30% 50% of 30% 50%

Note : the above date been further extended to 30Th September 2009. please check our article on the same at the link given below:-

Date of Purchase for higher rate of depreciation on Purchase of Commercial Vehicle extended to 30th September 2009


59 Responses to “Commercial Vehicle Acquired b/w 01.01.2009 to 31.03.2009 will be eligible to depreciation @ 50%”

  1. BHARAT says:

    we had purchased car and commercial vehicle 25-9-2009 and taken benefit of 50 % depreciation for same year.Now financial year 2012-13 what rate it should be taken.

  2. NARAYAN SATARDEKAR says:

    sir, i am working as an architect , i earned professional fees for the same. my question is can i take the benefit of depreciation for my bike ( purchase before two year) , two laptops ( purchase before two year ) in my profit & loss for this year. pls consult . 

  3. DAUKAWALA says:

    I have purchased Gen Estilo car on 25-9-2009 and taken benefit of 50 % depreciation for same year.Now financial year 2010-11 what rate it should be taken.

  4. Hitesh Alwani says:

    To Mr.Pillai

    It will be considered as commercial vehicle so it will be charged as per issued rate by I.T dept. for the block of commercial vehicle as well as benefit of 50% is not eligible as per given clarification above.

    To Mr.Gaurav

    Yes for both and please read further I.T act for confirmation.

  5. gaurav says:

    I would like to know if the car is registered on personal name of Director, IT allows depreciation to be claimed by company. Will interest on Loan be allowed as deduction to company if the loan is in name of company?

  6. D.A PILLAI says:

    I would like to know the rate of depriciation on road roller

  7. Samyak Modi says:

    If I purchase a car today i.e. 19th March 2010, for my professional use and register it under the commercial vehicle segment, am I still eligible to claim the 50% depreciation on the car for this financial year??

  8. Aditya says:

    I am a Consultant to an MNC and planning to buy a Honda City for my work use. what kind of depreciation could I be eligible to if I buy the car between 01-01-2010 to 31-03-2010 and what would be the depreciation after that.. Pls help…

  9. Chandraprakash Dad says:

    I am a energy auditor and want to purchase commercial vehical Ennova for business purpose , I am working as individual , can i get depreciation benefit and how much dipreciation i get if i purchased vehical in december 2009

  10. RG says:

    Dear Sudeep Bhagwat

    I am a government employee and I am interested in a Maruti Suzuki SX4. I heard that Maruti is providing SX4 to government employees at DGS & D Rate. Could you please confirm the same and if so the details and formalities that go into it.
    Unable to get to your email.

  11. If you buy on or before 30th September 2009 then you can claim 50% depreciation.

  12. Varun Soni says:

    Hi…
    I want to buy Ritz for my business purpose.
    Will that be eligible for 50% depreciation..
    I have apartnership concern

  13. DATE OF PURCHASE FOR HIGHER RATE OF DEPRECIATION ON PURCHASE OF COMMERCIAL VEHICLE EXTENDED TO 30TH SEPTEMBER 2009

    please check our post for the same at the undermentioned link:-
    http://www.taxguru.in/income-tax/date-of-purchase-for-higher-rate-of-depreciation-on-purchase-of-commercial-vehicle-extended-to-30th-september-2009.html

  14. Gurvinder says:

    whether Dep on commercial vehicle is extended from april onwards

  15. yes the same can be for F.Y. 08-09 i.e. A.Y. 09-10 if purchased between 01.01.2009 to 31.03.2009.

  16. Nitin A says:

    “They shall come into force on the 1st day of April, 2009.”…..does it refer to Financial Year or Assessment Year?
    Can I claim depreciation at a higher rate for the FY 08-09, i.e AY 09-10?

  17. The point is not yet clarified by department but in my view it will not be eligible for 50% rate of depreciation.

  18. Mehul Shah says:

    i bought a santro car for the business perpose on dt. 15-03-2009. the car’s weight is less then 6000 kg. so can i claim 50 % depriciation under the head of light moter vehicle(LMV. plz give ur comments.

  19. neel says:

    will the 50% depriciation on commercial vehicle be applicable in case of comprehensive insurance too so, i hav to pay half the premium excluding 3rd party and service tax ?

  20. Sandeep Kanoi says:

    The benefit of enhanced depreciation on commercial vehicles has been extended up to 30th September 2009 vide notification dated 21st April, 2009 issued by CBDT.

  21. sir, 50% dep. scheme extended ? what can i purchase new private car this time ?

  22. Mohammad_Ali says:

    Yes!

  23. Mohammad Ali says:

    If The Car is Purchased on Taxi Permit / public Transport , It will be eligible for Dep @ 50%

    As point 6. states:

    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 “road-roller” shall have the meanings respectively assigned to them in Sec. 2 of the Motor Vehicles Act, 1988 (59 of 1988).”

    The above definition would include light vehicles as well. In fact, passenger cars used by the tourism industry should qualify as commercial vehicles, when they are licensed as public transport.

  24. Anand Chaturvedi says:

    Generally Companies never use to purchase vehicles on their Names, they purchase on the name of Employees or Manager or Director's to avoid from treating them as Commercial Vehicles.

  25. kamlesh says:

    50% & 25% for half year

  26. kamlesh says:

    yes

  27. kamlesh says:

    Yes, athough your client is govt civil contractor & has acquired commercial vehicle between 01.01.09 to 31.03.09 & put to use during same period can claim 50% depreciation

  28. kamlesh says:

    It must be acquired & put to use between 01.01.2009 to 31.03.2009

  29. narendra says:

    sir, i purchase swift disire taxi pass under commercial vehicle, i am under 50% ?

  30. ashwin says:

    “light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road – roller the unladen weight of any of which, does not exceed 6,000 kilograms means any of lmv cars like ford…. pls reply for business tour & business perpose

  31. As car doesn't come under the definition of commercial vehicle.

  32. Please check the article above further clarification been added.

  33. No. you will not be able to. I have added few more content in the article above to make you understand better

  34. Yes but only for commercial vehicle purchased b/w 01.01.2009 to 31.03.2009.

  35. No. As car doesn't come under the definition of commercial vehicle.

  36. Not on car but can surely on truck as car doesn't come under the definition of commercial vehicle.

  37. narendra says:

    please know my propritorship firm we want purchase new car , i can dep. 50% allow . please write me your best suggestion.

  38. VIJAY says:

    If I buy a HONDA CITY CAR in my properator company name which is a consultancy firm, can i get 50% depreciation as per the proposed ammendment.

  39. Sandeep Kanoi says:

    Depreciation itself is allowable only if the Assets is used for business purpose.

  40. Sanjeev Popli says:

    Can u please make it clear that this rate of depr. of 50% is applicable on cars used for business purposes or not???

  41. Sandeep Kanoi says:

    15% will be rate of depreciation.

  42. Sanjeev Popli says:

    I purchased Maruti SX4 on 26 dec 2008… What rate of Depreciation am eligible for????

  43. Naveen says:

    I will be purchasing an Hyundai I10 on 26th march (individual registration).
    What rate of depreciation will I be eligible for?

  44. Dear Prasad,

    You can surely take 50% depreciation rate for commercial vehicle purchase B/w 01.01.2009 to 31.03.2009

  45. prasad.k says:

    Hi
    pls tell me 50% Depreciation for commercial Vehicle(purchase B/W 01.01.09 to 31.03.09)i can Account depreciation for the Financial Year 2008-09

  46. Paresh says:

    Hi,

    Still not clear whether the rule is applicable for only commercial vehicles.
    Actually I am into a newspaper retail & wholesale business. If i buy a motor car with a private RTA passing for business use, then would i be able to take advantage of this new rule.

    Thanks & regards,

    Paresh B.

  47. CA S N Agte says:

    What Would be the depreciation Rate for the subsequesnt year whether same @ 50% or previous Rate

  48. Mahesh Deshpande says:

    Sir,

    I have a propriotory compay.

    If I purchae the a new car on my own name can I get 50% depreciation and from next year what is rate of depreciation.

  49. Sandeep Kanoi says:

    Yes he can if he Purchased the same b/w 01.01.2009 to 31.03.2009. But we shouldnt forget that effective rate will be 25% for this year as assets will be in use for less then 182 days.

  50. Nikhil says:

    I just want to confirm whether my assessee who is a govt civil contractor, can claim depreciation @ 50% on his carshown in his business assets and the trucks used in his business.

  51. Sudeep Bhagwat says:

    Hi,

    Will company purchased cars i.e car given to employees but are on company’s name be entitled for 50% depreciation.

    Regards,
    Sudeep

  52. Poonam Gaikwad says:

    Thanks for updating.

  53. Sandeep Kanoi says:

    I updated the same in post above.

  54. Poonam Gaikwad says:

    Plz advice me about which are the Commercial Vehicle?

  55. Vidya says:

    Its my pleasure,
    i always read your updates and update myself

    Regards,
    Vidya

  56. Sandeep Kanoi says:

    Thanks for correcting. You are right I intended to mention 01.01.2009 to 31.03.2009. Its been rectified now.

  57. Vidya says:

    Hi,

    Small doubt in the heading its mentioned vehicle acquired b/w 1.4.2009 to 31.3.2009 is it right or it is from 1.1.2009 to 31.3.2009 (acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009)

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