SCHEDULE II ( With all the amendments till 31.08.2014 )

(See section 123)



1. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value. The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.

2. For the purpose of this Schedule, the term depreciation includes amortisation.

3. Without prejudice to the foregoing provisions of paragraph 1,—

(i) The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the residual value of an asset shall not be more than five percent of the original cost of asset. Provided that where a company adopts a useful life different from what is specified in Part C or uses a residual value different from the limit specified above, the financial statements shall disclose such difference and provide justification in this behalf duly supported by technical advice.                                                                                                                                                                             

(ii) In respect of other companies the useful life of an asset shall not be longer than the useful life and the residual value shall not be higher than that prescribed in Part C.

(iii) For intangible assets, the provisions of the Accounting Standards mentioned under sub-para (i) or (ii), as applicable, shall apply.

PART ‘B’                                                                                                                                                                                               

4. The useful life or residual value of any specific asset, as notified for accounting purposes by a Regulatory Authority constituted under an Act of Parliament or by the Central Government shall be applied in calculating the depreciation to be provided for such asset irrespective of the requirements of this Schedule.

PART ‘C’                                                                                                                                                                                               

5. Subject to Parts A and B above, the following are the useful lives of various tangible assets:

Nature of assets Useful Life
I. Buildings [NESD]
(a) Buildings (other than factory buildings) RCC Frame Structure 60 Years
(b) Buildings (other than factory buildings) other than RCC Frame Structure 30 Years
(c) Factory buildings -do-
(d) Fences, wells, tube wells 5 Years
(e) Others (including temporary structure, etc.) 3 Years
II. Bridges, culverts, bunders, etc. [NESD] 30 Years
III. Roads [NESD]
(a) Carpeted roads
(i) Carpeted Roads-RCC 10 Years
(ii) Carpeted Roads-other than RCC 5 Years
(b) Non-carpeted roads 3 Years
IV.Plant and Machinery
(i) General rate applicable to plant and machinery not covered under special plant and machinery
(a) Plant and Machinery other than continuous process plant not covered under specific industries 15 Years
(b) continuous process plant for which no special rate has been prescribed under (ii) below [NESD] 8 Years
(ii) Special Plant and Machinery
(a) Plant and Machinery related to production and exhibition of Motion Picture Films
1. Cinematograph films—Machinery used in the production and exhibition of cinematograph films, recording and reproducing equipments, developing machines, printing machines, editing machines, synchronizers and studio lights except bulbs 13 Years
2. Projecting equipment for exhibition of films -do-
(b) Plant and Machinery used in glass manufacturing
1. Plant and Machinery except direct fire glass melting furnaces —
Recuperative and regenerative glass melting furnaces 13 Years
2. Plant and Machinery except direct fire glass melting furnaces —
Moulds [NESD] 8 Years
3. Float Glass Melting Furnaces [NESD]  10 Years
(c) Plant and Machinery used in mines and quarries—Portable underground machinery and earth moving machinery used in open cast mining [NESD] 8 Years
(d) Plant and Machinery used in Telecommunications [NESD]
1. Towers 18 Years
2. Telecom transceivers, switching centres, transmission and other network equipment 13 Years
3. Telecom—Ducts, Cables and optical fibre 18 Years
4. Satellites -do-
(e) Plant and Machinery used in exploration, production and refining oil and gas [NESD]
1. Refineries 25 Years
2. Oil and gas assets (including wells), processing plant and facilities -do-
3. Petrochemical Plant -do-
4.Storage tanks and related equipment -do-
30 Years
6.Drilling Rig -do-
Field operations (above ground) Portable boilers, drilling tools, well-head tanks, etc.
8 Years
8. Loggers -do-
(f ) Plant and Machinery used in generation, transmission and distribution of power [NESD]
  1. Thermal/ Gas/ Combined Cycle Power Generation Plant
40 Years
  1. Hydro Power Generation Plant
  1. Nuclear Power Generation Plant
  1. Transmission lines, cables and other network assets
  1. Wind Power Generation Plant
22 Years
  1. Electric Distribution Plant
35 Years
  1. Gas Storage and Distribution Plant
30 Years
  1. Water Distribution Plant including pipelines
(g) Plant and Machinery used in manufacture of steel
1. Sinter Plant 20 Years
2. Blast Furnace -do-
3. Coke ovens -do-
4. Rolling mill in steel plant -do-
5. Basic oxygen Furnace Converter 25 Years
(h) Plant and Machinery used in manufacture of non-ferrous metals
1. Metal pot line [NESD] 40 Years
Bauxite crushing and grinding section [NESD]
3. Digester Section [NESD] -do-
4. Turbine [NESD] -do-
5. Equipments for Calcination [NESD] -do-
6. Copper Smelter [NESD] -do-
7. Roll Grinder 40 Years
8. Soaking Pit 30 Years
9. Annealing Furnace -do-
10. Rolling Mills -do-
11. Equipments for Scalping, Slitting , etc. [NESD] -do-
12. Surface Miner, Ripper Dozer, etc., used in mines 25 Years
13. Copper refining plant [NESD] -do-
(i) Plant and Machinery used in medical and surgical operations [NESD]
1. Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories thereto, medical, diagnostic equipments, namely, Cat-scan, Ultrasound Machines, ECG Monitors, etc. 13 Years
2. Other Equipments. 15 Years
(j) Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD]
  1. Reactors
20 Years
  1. Distillation Columns
  1. Drying equipments/Centrifuges and Decanters
  1. Vessel/storage tanks
(k) Plant and Machinery used in civil construction
1. Concreting, Crushing, Piling Equipments and Road Making Equipments 12 Years
2. Heavy Lift Equipments—
Cranes with capacity of more than 100 tons 20 Years
Cranes with capacity of less than 100 tons 15 Years
3. Transmission line, Tunneling Equipments [NESD] 10 Years
4. Earth-moving equipments 9 Years
5. Others including Material Handling /Pipeline/Welding Equipments [NESD] 12 Years
(l) Plant and Machinery used in salt works [NESD] 15 Years
V. Furniture and fittings [NESD]
(i) General furniture and fittings 10 Years
(ii) Furniture and fittings used in hotels, restaurants and boarding houses, schools, colleges and other educational institutions, libraries; welfare centres; meeting halls, cinema houses; theatres and circuses; and furniture and fittings let out on hire for use on the occasion of marriages and similar functions. 8 Years
VI.Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds 10 Years
2. Motor buses, motor lorries, motor cars and motor taxies used in
a business of running them on hire 6 Years
3. Motor buses, motor lorries and motor cars other than those used in a business of running them on hire 8 Years
4. Motor tractors, harvesting combines and heavy vehicles -do-
5. Electrically operated vehicles including battery powered or fuel cell powered vehicles 8 Years
VII. Ships [NESD]
1. Ocean-going ships
(i) Bulk Carriers and liner vessels 25 Years
(ii) Crude tankers, product carriers and easy chemical carriers with or without conventional tank coatings. 20 Years
(iii) Chemicals and Acid Carriers:
(a) With Stainless steel tanks 25 Years
(b) With other tanks 20 Years
(iv) Liquified gas carriers 30 Years
(v) Conventional large passenger vessels which are used for cruise purpose also -do-
(vi) Coastal service ships of all categories
(vii) Offshore supply and support vessels 20 Years
(viii) Catamarans and other high speed passenger for ships or boats -do-
(ix) Drill ships 25 Years
(x) Hovercrafts 15 Years
(xi) Fishing vessels with wooden hull 10 Years
(xii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes 14 Years
2. Vessels ordinarily operating on inland waters—
(i) Speed boats 13 Years
(ii) Other vessels 28 Years
VIII. Aircrafts or Helicopters [NESD] 20 Years
IX. Railways sidings, locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns [NESD] 15 Years
X. Ropeway structures [NESD] 15 Years
XI. Office equipment [NESD] 5 Years
XII. Computers and data processing units [NESD]
(i) Servers and networks 6 Years
(ii) End user devices, such as, desktops, laptops, etc. 3 Years
XIII. Laboratory equipment [NESD]
(i) General laboratory equipment 10 Years
(ii) Laboratory equipments used in educational institutions 5 Years
XIV. Electrical Installations and Equipment [NESD] 10 years
XV. Hydraulic works, pipelines and sluices [NESD] 15 Years


1. “Factory buildings” does not include offices, godowns, staff quarters.

2. 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.

3. The following information shall also be disclosed in the accounts, namely:—

(i) depreciation methods used; and

(ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule.

4 (a). Useful life specified in Part C of the Schedule is for whole of the asset and where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.

4 (b). The requirement under sub paragraph (a) shall be voluntary in respect of the financial year commencing on or after the 1st April 2014 and mandatory for financial statements in respect of financial statements in respect of financial years commencing on or after the 1st April, 2015.                                                                                                            

5.  Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Ordinarily, the residual value of an asset is often insignificant but it should generally be not more than 5% of the original cost of the asset.

6. The useful lives of assets working on shift basis have been specified in the Schedule based on their single shift working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be calculated on the basis of 100% for that period.

7. From the date this Schedule comes into effect, the carrying amount of the asset as

on that date—

(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;

(b) after retaining the residual value, may be recognised in the opening balance of retained earnings where the remaining useful life of an asset is nil.

8. ‘Continuous process plant’’ means a plant which is required and designed to operate for twenty-four hours a day.

 (Compiled by CA Vivekanand Pote who is Working as Finance Professional in Automobile Industry and can be contacted at

Author Bio

More Under Company Law


  1. Jeris says:

    In the year of decrease in the useful life, amount to be amortized should be higher as to keep the asset in tact. MAT cr paid earlier can be set off in the year of change

  2. S S ROY says:

    I have a point to make here. In my opinion , any adjustment on account of differential depreciation (due to change in useful life) should not be straightaway adjusted to retained earnings without routing through Profit & Loss account. In the ultimate analysis , such adjustments are essentially of revenue nature and should be adjusted through PL account. Moreover ,there is a tax implication to such adjustment. For example, suppose a company has charged ‘lower’ depreciation in earlier years due to higher useful life considered at that time and say, has paid MAT on book profit computed based on that lower depreaciation in those earlier year. Later , if due to decrease in useful life following the new Sch II, the company is required to adjust shortfall in depreciation (in earlier years) in opening retained earnings, the company will lose the benefit of that charge for MAT calculation (if applicable to the company). Further, there are other statutory payments depending on ‘book profit’ which will also get distorted due to such provisions.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

December 2020