Overview: Businesses invest in furniture, computers, machinery and other assets to run their operations. Indian income-tax law allows eligible businesses to claim depreciation on qualifying assets, subject to prescribed rates and conditions. Furniture and fittings generally attract a 10% rate, general plant and machinery 15%, and computers 40%. The correct rate depends on the asset category, its business use and the tax year for which depreciation is claimed.
Buying an asset does not usually mean that a business can deduct its entire cost from taxable income in the year of purchase. Instead, depreciation allows the cost of eligible assets to be recognised over time under the applicable tax rules.
The rate is only one part of the calculation. Asset classification, business use, the date the asset was first used and supporting records also matter. Using an outdated depreciation chart can lead to errors in a tax computation.
Depreciation rates for furniture, computers and plant and machinery
For tax years governed by the Income-tax Act, 2025, Section 33 covers depreciation. Rule 25 and Appendix I of the Income-tax Rules, 2026 prescribe the rates for different asset categories. Depreciation for most businesses is calculated on the written down value (WDV) of the relevant block of assets.
The table below summarises commonly used rates. It is a quick reference, not a substitute for checking the complete schedule.
| Asset category | Depreciation rate |
|---|---|
| Furniture and fittings, including electrical fittings | 10% |
| General plant and machinery not covered by a special entry | 15% |
| Computers, including computer software covered by the entry | 40% |
| Motor cars not used in a business of running them on hire | Generally 15% |
| Motor buses, motor lorries and motor taxis used in a business of running them on hire | Generally 30% |
| Aeroplanes and aero-engines | 40% |
| Eligible intangible assets, such as patents, copyrights, trademarks and licences | 25% |
Some assets have separate entries or specific conditions. Motor vehicles, for example, may be subject to different rates depending on their type, use and acquisition history. Always check the relevant entry before applying a rate.
What is the depreciation rate for furniture and fittings?
Furniture and fittings generally attract depreciation at 10%. Office desks, chairs and storage cabinets are common examples of business furniture. Qualifying electrical fittings are also included in this category.
Keep the purchase invoice and record the asset in the fixed-asset register. The record should identify the item, its cost, acquisition date and business use.
If furniture is used partly for personal or non-business purposes, the deduction may be restricted to the business-use proportion. Section 33(3)(b) of the Income Tax Act provides for proportionate restriction where an asset is not used wholly and exclusively for business or professional purposes.
What is the depreciation rate for computers?
Computers, including computer software covered by the prescribed entry, generally attract depreciation at 40%.
Do not automatically classify every electronic device as a computer. Networking equipment, specialist controllers and other hardware may need to be checked against the relevant asset category.
For each purchase, record what the equipment is, when it was acquired and when it was first put to business use. Clear descriptions make it easier to support the rate used in the tax computation.
What is the depreciation rate for plant and machinery?
General plant and machinery generally attracts depreciation at 15%. However, the schedule contains specific entries for certain assets and industries.
A business should not apply the general rate without checking whether its equipment falls under a special entry. The same applies to assets that may qualify for a higher rate. The category must match the actual asset and the relevant statutory conditions.
For vehicles and specialised equipment, checking the full schedule is particularly important. The description of an asset in a purchase invoice may not, by itself, settle its tax classification.
Conditions for claiming depreciation
Before finalising a depreciation claim, check the following requirements under the law applicable to the tax year.
- Ownership: The asset must meet the ownership requirements under the relevant provision.
- Business use: The asset must be used for business or professional purposes. Where the use is partly non-business, the allowable deduction may be restricted.
- Correct classification: The asset must be placed in the appropriate block or category.
- Date first put to use: This can affect the amount deductible in the year of acquisition.
- Supporting records: Keep invoices, payment records, asset descriptions and evidence of business use.
The 180-day rule
Under Section 33(4) of the Income-tax Act, 2025, depreciation is restricted to 50% of the prescribed rate when a qualifying asset is acquired during the tax year and put to business use for fewer than 180 days in that year.
For example, if an asset falls under the general plant and machinery rate of 15% and the restriction applies, the depreciation rate for that year is effectively 7.5%. The applicable conditions must be checked before using this illustration for an actual claim.
How to calculate depreciation using the WDV method
Under the Written Down Value (WDV) method, depreciation for a block of assets is calculated on its written down value, after accounting for relevant additions, disposals and statutory restrictions.
Consider a simple example with no additions or disposals during the year.
| Particulars | Amount |
|---|---|
| Opening WDV of the plant and machinery block | ₹5,00,000 |
| Applicable depreciation rate | 15% |
| Depreciation for the year | ₹75,000 |
| Closing WDV | ₹4,25,000 |
The calculation is ₹5,00,000 × 15% = ₹75,000. The closing WDV is ₹5,00,000 − ₹75,000 = ₹4,25,000.
This is a simplified example. In an actual tax computation, additions and disposals must be treated under the applicable block-of-assets rules. Assets put to use for fewer than 180 days may also require a separate calculation.
A business should reconcile its fixed-asset register with the depreciation schedule used for its tax return. This is especially useful when several assets are acquired, sold or discarded during the same year.
Additional depreciation on new plant and machinery
Eligible businesses may claim additional depreciation under Section 33(8) and Section 33(9) of the Income-tax Act, 2025. The provision covers qualifying new machinery or plant acquired and installed by businesses engaged in manufacturing or production, or in the generation, transmission or distribution of power, subject to the statutory conditions.
The additional deduction is generally 20% of the actual cost of qualifying machinery or plant. If the asset is acquired and put to use for fewer than 180 days in the relevant tax year, 10% may be allowed in that year and the remaining 10% in the immediately succeeding tax year.
The benefit is not available for every asset. The law excludes specified categories, including certain previously used assets, ships and aircraft, office appliances, road transport vehicles and assets installed in office premises or residential accommodation, including a guest house. Other conditions and exclusions may also apply.
Check eligibility before including additional depreciation in the return. A business should not assume that an asset qualifies simply because it is new or used in manufacturing.
Tax depreciation versus depreciation in financial statements
Tax depreciation and book depreciation serve different purposes. Tax depreciation follows the applicable income-tax provisions and prescribed rates. Depreciation in financial statements follows the accounting framework and other requirements applicable to the business, including the Companies Act 2013 where relevant.
The amounts may differ. Businesses should maintain a reconciliation explaining the difference between depreciation recorded in their books and the deduction used in the tax computation.
This reconciliation is also useful when preparing corporate tax calculations and income-tax returns. Clear records help the business explain how its reported profit differs from the profit calculated under tax rules.
Supreme Court on ownership and depreciation
In Mysore Minerals Ltd. v. Commissioner of Income Tax, the Supreme Court considered a depreciation claim relating to houses allotted to a company for its staff. The company had made part payments and received possession, although the conveyance deeds had not been executed.
The Court examined whether the company could be treated as the owner for depreciation purposes on those facts. The decision is relevant when considering beneficial ownership, but it does not mean that payment and possession automatically establish entitlement to depreciation in every situation.
The ruling arose under Section 32 of the Income-tax Act, 1961. It should be read in its factual and legal context rather than treated as a blanket exception to the ownership requirements under the current law.
Frequently asked questions
Furniture and fittings, including qualifying electrical fittings, generally attract depreciation at 10%. The asset must meet the applicable conditions.
Computer software covered by the prescribed entry generally falls under the 40% category. The asset must be classified correctly under the applicable schedule.
Where the statutory restriction applies, depreciation on an eligible asset acquired during the tax year and put to business use for fewer than 180 days is limited to 50% of the prescribed rate for that year. Additional depreciation is subject to its own corresponding rule.
The allowable deduction may be restricted to the business-use proportion. The business should retain records supporting its claim.
The applicable provisions depend on the tax year and the relevant transition rules. Section 32 of the Income-tax Act, 1961 and Rule 5 were relevant under the earlier framework. For tax years governed by the Income-tax Act, 2025, check Section 33, Rule 25 and the applicable depreciation schedule.
Setindiabiz support
A depreciation claim depends on more than selecting the right percentage. Asset classification, purchase records, dates of use and disposal details all affect the tax computation. Gaps in these records can complicate return preparation and responses to tax queries.
Setindiabiz professionals support businesses with compliance documentation, record management and related statutory filings. Our team helps keep these requirements organised so business owners can focus on running and growing their businesses.
