Section 205 of the Companies Act, 1956, prescribes the methods of charging depreciation. The relevant extracts thereof are as follows:
“(2) … depreciation shall be provided either-
(a) to the extent specified in section 350; or
(b) in respect of each item of depreciable asset, for such an amount as is arrived at by dividing ninety five percent of the original cost thereof to the company by the specified period in respect of such asset; or
(c) on any other basis approved by the Central Government which has the effect of writing off by way of depreciation ninety five per cent of the original cost to the company of each such depreciable asset on the expiry of the specified period; or
(d) as regards any other depreciable, asset for which no rate of depreciation has been laid down by this Act or rules made thereunder, on such basis as may be approved by the Central Government by the general order published in the Official Gazette or by any special order in any particular case:
Provided that where depreciation is provided for in the, manner laid down in clause (b) or clause (c), then, in the event of the depreciable asset being sold, discarded, demolished or destroyed the written down value thereof at the end of the financial year in which the asset is sold, discarded, demolished or destroyed, shall be written off in accordance with the proviso to section 350.
………..
(5) ‘Specified period’ in respect of any depreciable asset shall mean the number of years at the end of which at least ninety-five per cent of the original cost of the asset to the company will have been provided for by way of depreciation if depreciation were to be calculated in accordance with the provisions of section 350.
Also Read-
We are producing below the Rates of depreciation under the Companies Act as mentioned in Schedule XIV
schedule xiv
[See sections 205 and 350]
Rates of depreciation
| Nature of assets | Single Shift | Double Shift | Triple Shift | ||||||
| WDV | SLM | WDV | SLM | WDV | SLM | ||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | |||
| I. (a) | BUILDINGS (other than factory buildings) [NESD] | 5% | 1.63% | ….. | ….. | ….. | ….. | ||
| (b) | FACTORY BUILDINGS | 10%. | 3.34% | ….. | ….. | ….. | ….. | ||
| (c) | PURELY TEMPORARY ERECTIONS such as wooden structures | 100% | 100% | ….. | ….. | ….. | ….. | ||
| II. PLANT AND MACHINERY | |||||||||
| 1[(i) General rate applicable to,— | |||||||||
| (a) plant and machinery (not being a ship) other than continuous process plant for which no special rate has been prescribed under (ii) below | 13.91% | 4.75% | 20.87% | 7.42% | 27.82% | 10.34% | |||
| (b) continuous process plant, 2[* * *] for which no special rate has been prescribed under (ii) below [NESD] | 15.33% | 5.28% | ….. | ….. | ….. | …..] | |||
| (ii) Special rates | |||||||||
| A.1.Cinematograph films – Machinery used in the production and exhibition of cinematograph films [NESD] | 20% | 7.07% | ….. | ….. | ….. | ….. | |||
| (a) Recording equipment, reproducing equipment, developing machines, printing machines, editing machines, synchronisers and studio lights except bulbs | |||||||||
| (b) Projecting equipment of film exhibiting concerns | |||||||||
| 2. Cycles [NESD] | |||||||||
| 3[3. Electrical machinery, X-ray and electro-therapeutic apparatus and accessories thereto, medical, diagnostic equipments, namely, cat-scan, ultrasound machines, ECG monitors, etc. [NESD] | 20% | 7.07% | ….. | ….. | ….. | ….. | |||
| 4. Juice boiling pans (karhais) [NESD] | 20% | 7.07% | ….. | ….. | ….. | ….. | |||
| 5. Motor-cars, motor-cycles, scooters and other mopeds [NESD] | 25.89% | 9.5% | ….. | ….. | ….. | ….. | |||
| 6. Electrically operated vehicles including battery powered or fuel cell powered vehicles [NESD] | 20% | 7.07% | ….. | ….. | ….. | ….. | |||
| 7. Sugarcane crushers (indigenous kolhus and belans) [NESD] | 20% | 7.07% | ….. | ….. | ….. | ….. | |||
| 8. Glass manufacturing concerns except direct fire glass melting furnaces – Recuperative and regenerative glass melting furnaces | 20% | 7.07% | 30% | 11.31% | 40% | 16.21% | |||
| 9. Machinery used in the manufacture of electronic goods and components | 15.62% | 5.38% | 23.42% | 8.46% | 31.23% | 11.87%] | |||
| B. 1. 4[Aeroplanes, aero engines, simulators, visual system and quick engine change equipment [NESD] | 16.2% | 5.6%] | |||||||
| 2. Concrete pipes manufacture—Moulds [NESD] | 30% | 11.31% | ….. | ….. | ….. | ….. | |||
| 3. Drum containers manufacture—Moulds [NESD] | |||||||||
| 4. Earth-moving machinery employed in heavy construction works, such as dams, tunnels, canals, etc. [NESD] | |||||||||
| 5. Glass manufacturing concerns except direct fire glass melting furnaces—Moulds [NESD] | |||||||||
| 6. Moulds in iron foundries [NESD] | |||||||||
| 7. Mineral oil concerns—Field operations (above ground)—Portable boilers, drilling tools, well-head tanks, rigs, etc. [NESD] | |||||||||
| 8. Mines and quarries—Portable underground machinery and earth-moving machinery used in open cast mining [NESD] | |||||||||
| 9. Motor buses and motor lorries other than those used in a business of running them on hire [NESD] | |||||||||
| 9A. Motor tractors, harvesting combines [NESD] | |||||||||
| 10. Patterns, dies and templates [NESD] | |||||||||
| 11. Ropeway structures—Ropeways, ropes and trestle sheaves and connected parts [NESD] | |||||||||
| 12. Shoe and other leather goods fabrics—Wooden lasts used in the manufacture of shoes | 30% | 11.31% | 45% | 18.96% | 60% | 29.05% | |||
| C. 1. 5[** ** **] | |||||||||
| 2. Motor buses, motor lorries and motor taxis used in a business of running them on hire [NESD] | 40% | 16.21% | ….. | ….. | ….. | ….. | |||
| 3. Rubber and plastic goods factories—Moulds [NESD] | |||||||||
| 4. Data processing machines including computers [NESD] | 40% | 16.21% | ….. | ….. | ….. | ….. | |||
| 5. Gas cylinders including valves and regulators [NESD] | |||||||||
| D. 1. Artificial silk manufacturing machinery with wooden parts | 100% | 100% | ….. | ….. | ….. | ….. | |||
| 2. Cinematograph films—Bulbs of studio lights | |||||||||
| 3. Flour mills—Rollers | |||||||||
| 4. Glass manufacturing concerns—Direct fire glass melting furnaces | |||||||||
| 4A. Flot Glass Melting Furnaces (NESD) | 27% | 10% | ….. | ….. | ….. | ….. | |||
| 5. Iron and Steel industries—Rolling mill rolls | 100% | 100% | ….. | ….. | ….. | ….. | |||
| 6. Match factories—Wooden match frames | |||||||||
| 7. Mineral oil concerns—(a) Plant used in field operations (below ground)—Distribution – returnable packages; (b) Plant used in field operations (below ground) but not including assets used in field operations (distribution)—Kerbside pumps including underground tanks and fittings | |||||||||
| 8. Mines and quarries— | |||||||||
| (a) Tubs, winding ropes, haulage ropes and sand stowing pipes | |||||||||
| (b) Safety lamps | |||||||||
| 9. Salt works—Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clay material or any other similar material | |||||||||
| 10. Sugar works—Rollers | |||||||||
| III. FURNITURE AND FITTINGS | |||||||||
| 6[1. General Rates [NESD] | 18.1% | 6.33% | ….. | ….. | ….. | ….. | |||
| 2. Rate for furniture and fittings used in hotels, restaurants and boarding houses; schools, colleges and other education al institutions, libraries; welfare centres; meeting halls, cinema houses; theatres and circuses; and for furniture and fittings let out on hire for use on the occasion of marriages and similar functions [NESD] | |||||||||
| IV. SHIPS | |||||||||
| 1. Ocean-going ships— | 25.88% | 9.5% | ….. | ….. | ….. | ….. | |||
| (i) Fishing vessels with wooden hull [NESD] | |||||||||
| (ii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes [NESD] | 27.05% | 10% | ….. | ….. | ….. | ….. | |||
| (iii) Other ships [NESD] | 19.8% | 7% | ….. | ….. | ….. | ….. | |||
| 2. Vessels ordinarily operating on inland waters— | 14.6% | 5% | ….. | ….. | ….. | ….. | |||
| (i) Speed boats [NESD] | |||||||||
| (ii) Other vessels [NESD] | |||||||||
| WDV means written down value | 20% | 7.07% | ….. | ….. | ….. | ….. | |||
| SLM means straight line method | 10% | 3.34% | ….. | ….. | ….. | ….. | |||
NOTES
1. “Buildings” include roads, bridges, culverts, wells and tube-wells.
2. “Factory buildings” does not include offices, godowns, officers’ and employees’ quarters, roads, bridges, culverts, wells and tube-wells.
3. “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.
4. Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
5. The following information should also be disclosed in the accounts:
(i) depreciation methods used; and
(ii) depreciation rates or the useful lives of the assets, if they are different from the principal rates specified in the Schedule.
6. The calculations of the extra depreciation for double shift working and for triple shift working shall be made separately in the proportion while the number of days for which the concern worked double shift or triple shift, as the case may be, bears to the normal number of working days during the year. For this purpose, the normal number of working days during the year shall be deemed to be—
(a) in the case of a seasonal factory or concern, the number of days on which the factory or concern actually worked during the year or 180 days, whichever is greater;
(b) in any other case, the number of days on which the factory or concern actually worked during the year or 240 days, whichever is greater.
The extra shift depreciation shall not be charged in respect of any item of machinery or plant which has been specifically, excepted by inscription of the letters “NESD” (meaning “no extra shift depreciation”) against it in sub-items above and also in respect of the following items of machinery and plant to which the general rate of depreciation of 7[13.91] per cent applies—
(1) Accounting machines.
(2) Air-conditioning machinery including room air-conditioners.
(3) Building contractor’s machinery.
(4) Calculating machines.
(5) Electrical machinery—switchgear and instruments, transformers and other stationary plant and wiring and fitting of electric light and fan installations.
(6) Hydraulic works, pipelines and sluices.
(7) Locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns.
(8) Mineral oil concerns—field operations:
(a) 8[* * *]
(b) Prime movers
(c) 8[* * *]
(d) Storage tanks (above ground)
(e) Pipelines (above ground)
(f) Jetties and dry docks
(9) Mineral oil concerns—field operations (distribution)—kerbside pumps, including underground tanks and fittings.
(10) Mineral oil concerns—refineries :
(a) 9[* * *]
(b) Prime movers
(c) 9[* * *]
10[(d) LPG Plant]
(11) Mines and quarries :
(a) Surface and underground machinery (other than electrical machinery and portable underground machinery)
(b) Head-gears
(c) Rails
(d) 9[* * *]
(e) Shafts and inclines
(f) Tramways on the surface
(12) Neo-post franking machines.
(13) Office machinery.
(14) Overhead cables and wires.
(15) Railway sidings.
(16) Refrigeration plant container, etc. (other than racks).
(17) Ropeway structures :
(a) Trestle and station steel work.
(b) Driving and tension gearing.
(18) Salt works—Reservoirs, condensers, salt pans, delivery channels and piers if constructed of masonry, concrete, cement, asphalt or similar materials; barges and floating plant; piers, quays and jetties; and pipelines for conveying brine if constructed of masonry, concrete, cement, asphalt or similar materials.
(19) Surgical instruments.
(20) Tramways electric and tramways run by internal combustion engines—permanent way: cars—car trucks, car bodies, electrical equipment and motors; tram cars including engines and gears.
(21) Typewriters.
(22) Weighing machines.
(23) Wireless apparatus and gear, wireless appliances and accessories.]
(24) 11[* * *]
12[7. ‘Continuous process plant’ means a plant which is required and designed to operate 24 hours a day.
8. Notwithstanding anything mentioned in this Schedule, depreciation on assets, whose actual cost does not exceed five thousand rupees, shall be provided at the rate of hundred per cent:]
13[Provided that where the aggregate actual cost of individual items of plant and machinery costing Rs. 5,000 or less constitutes more than 10 per cent of the total actual cost of plant and machinery, rates of depreciation applicable to such items shall be the rates as specified in Item II of the Schedule.]
can i get depreciation rate as per company law for FACTORY BUILDING, COMPUTER, PLANT & MACHINERY, AIR CONDITIONER, FURNITURE, ELECTRICAL FITTING
Dear All
Please let me know depreciation applicable to Furniture & Fixture rate for the F.Y 2010-11.
Please revert me soon…….
Regards
Charan Singh
pl tell % of depreciation on Autocad Licence software.
As per Notes appended to the Rates of Depreciation under the Companies Act as mentioned in Schedule XIV—
“4. Where, during any financial year, any addition has been made to any asset… the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition…”.
“8…depreciation on assets, whose actual cost does not exceed five thousand rupees, shall be provided at the rate of hundred per cent”
Please advise whether, in case of buying a Cell Phone costing Rs 3000 in Jan, we should charge off in Accounts towards Depreciation in the year of acquisition
(a) Rs 3000 (entire cost being less than Rs 5000) as per Note 8; or
(b) Rs 756 (3000×100/100×91/365) only as per Note 4
If we charge off Rs 756 only in the year of acquisition and carry forward the balance to next year and go on calculating Depreciation at normal rate, it will lead to finding petty amounts in Assets Register
can you tell me the depreciation rate for
1) ups
2) computer softwares ?
Sir,
I am a student studying in 12th std. I study in gujrat hence the study is according to the Gujarat state board. I want to know if the depreciation on machine is recorded in p/l account and the depreciation on factory building is recorded in trading account why the depreciation on machine is not recorded in trading account.
Can we record the depreciation on machine in trading account.
SIR please reply
wat is the meaning of 180 days in depriciation
sir, please let me know the rate of depreciation on water cooler (RO) as per companies act
What is the depreciation rate on cellular.
purchased erp software & erp lience fees & integrated develpoment cost 2300000/- can company claims for depreciation on it?
Sir, I have lost Acknowledgement receipts of Quarterly e-TDS filling, and TIN -FC where igot my said statement filled is completely closed. Now i want to make some correction in that statement sir, plsese provide me your valuable guide
sir already submit the massage or comment sir i want the deprecitaion rats sir
Sir please send me information of depreciation companies and income tax act FY-2010-2011 please send me my mail id sir please help me sir.
i want to know depreciation rate for Kitchen item(utensils) as company Act & Income Tax Act for F.Y> 2010-11
I BOUGHT MY OFFICE For Rs. 6LAC
NOW I WANT TO SELL IT AROUND 20LACS
AFTER GETTING THE SELLING AM I WANT TO
AGAIN BOUGHT OFFICE SPACE FOR THE SAME AM 20LACS
PLS ADVISE IS THERE ANY TAX LIABLITY IF I MANAGE ALL
THIS PROCESS ON SAME FINANCIAL YEAR
Dear Sir,
I want to know the depreciation rates (Fin.Yr: 2008-2009 to 2010-2011) as per Company’s Act & Income Tax Act.
1) Plant & Machiney
2) Land & Building
3) Computer
4) Scooter
5) Computer
6) Telephone Equipment
7) Lap top
It would be very kind of you if you could help me in this matter.
Thanx & Regds,
Where the aggregate actual cost of Individual items of plant and machinary costing Rs5000/- or less constitutes more than 10% actual total actual cost of Plant & machinary,rates of depreciation applicable to such items shall be the rates specified in the schedule.In the case of low cost items acquired during the year,depreciation at the rate of 100% should be provided on pro rata basis.
whether depreciation losses can be set off/carried forward for many years if all assets were sold in previous year
1) Plant & Machinery
2) Land & Building
3) Computer
4) CAR & Scooter
6) Telephone & Mobile
Please send me above teams Depreciation rates
I want to know the depreciation rates (Fin.Yr: 2010-2011) as per Company’s Act & Income Tax Act.
1) Plant & Machiney
2) Land & Building
3) Computer
4) CAR & Scooter
6) Telephone & Mobile
09971175912
Sir,
I do`t no what is different inbetween Company and Industrial Deprectiation rate and why ? and what is purpose different of decription in above two section please explain me very humbly request.
Thanking you
M.Ramesh M.B.A
what is the rate for intangiable assets as per compan ies act?
Respected Sir/Madem,
please guide me about in which condition the depreciation charge on commercial vechicle @50%
please reply me
with regards
Braj Raj
Agra
PLEASE GIVE ME THE LIST OF LATEST RATES OF DEPRECIATION, TDS AND SERVICE TAX.
THANKS,
REGARDS,
GURPREET SINGH
under which categories accounted the Ganesh Statue is purchased for office decoration. and depreciation for the same?
kindly,
send me depreciation rates in xls format,
on fixed assets both as per companies act & i.tax act
Dear Sir,
Please mention the following:
Rate of Depriciation on Rolling mill rolls as per IT ACT
PATTABHI
pattabhi_t3@yahoo.co.in
Please send me Depriciation table as per Income tax act
Dear Sir,
I want to know the depreciation rates (Fin.Yr: 2009-2010: Ass.Yr. 2010-2011) as per Company’s Act & Income Tax Act.
1) Plant & Machiney
2) Land & Building
3) Computer
4) CAR & Scooter
6) Telephone & Mobile
Kishan Bidasaria
kishan.bidasaria@yahoo.com
plz tell me at what rate, should i provide depreciation on the website i have purchased…
is there depreciation as per companies act applicable on days basis.what is the procedures of depreciation of any addition or disposal made
To Mr. Vibhuj Gupta,
No, that asset will be added to the block to which it belongs and then dep willbe charged according to the rate of dep of that block.
i want to deprisation rate as per company act
in excel formate
What will be the rate of depreciation on ‘leasehold improvements’ if the lease period is 3 years and there are 100% chances of renewal of lease agreement.
Q.1 what is deffered tax assets & deffered tax liability?
Q 2. where will be show diffrenece between profit according to companies act and income tax act?
Q 3. what is ROC Return?
Q 4. Why fill up the ROC return?
dear sir
i don’t know how to calculate the depreciation under companies act and income tax act and also give me information depreciation percentage both act
Hello,
I would like to know the rate of depreciation both under the Companies Act and Income-Tax Act, for steel structures installed on an entertainment house on their premises.
Thanks
Srinivas
A company charges depreciation on mobile sets purchased for office use. Will d depreciation be charged on additional battery purchased or on installation of any software on mobile.? if yes How.??
Dear Sir,
I want to know the depreciation rates (Fin.Yr: 2010-2011: Ass.Yr. 2011-2012) as per Company’s Act & Income Tax Act.
1) Plant & Machiney
2) Land & Building
3) Computer
4) Scooter
5) Computer
6) Telephone Equipment
7) Lap top
8) EPBX SYSTEMS.
It would be very kind of you if you could help me in this matter.
Thanx & Regds,
N.Joshi
As per IAS -16 it is required to be reported whether depreciable amount is allocated systematiclly over its usefule life.
If the depreciation is provided as per companies Act,1956, Whether it can be said that the depreciation amount has been properly allocated to useful life of asset ?
Sir,
Pls. let me know whether same rate are applicable for FY 2009-10.
Any Rate of Depreciation Change in companies Act
What is the rate of depreciation for kitchen appliances and other kitchen items?
can a shift be long for more than 8 hrs.
my plant is running for 10 hrs can i claim depreciation on single shift basis.?
WHT R D RATES OF DEPRECIATION ON COMPUTER RELATED COMPONENTS LIKE PRINTER
sir
can a c.a firm claim depreciation on any software purchased by them eg software for e-filing tds ,it returns if so at what rate??
Sir,
Please let me know if it is not mandatory for a proprietorship concern to provide depreciation to its machineries that are used for business purpose. If it is not mandatory, please tell me which part of which Act mentions about it.
Dear sir,
Is it possible to claim the depreciation at the rates below specified in the SCH XIV of the companies act. If so, what are the situation, under which we can claim like that?
fantastic article.
Got my exams tomorrow. Definitely helps.
Respected Sir,i want to know that if any company purchases any assets costing Rs. lessthan 5000 then 100% depreciation will be chareged even allready company is having such assets account in thier books