Rates of Depreciation as Per Companies Act 2013

Depre­ci­a­tion under com­pa­nies act to be cal­cu­lat­ed based on the use­ful life of any assets. Com­pa­nies act 2013 has pre­scribed the use­ful life of any asset. 

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. 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.’

3. 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]	25 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 under ground 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 tran­sre­ceivers, 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-
5. Pipelines	30 Years
6. Drilling Rig	‑do-
7. 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
2. Hydro Pow­er Gen­er­a­tion Plant	‑do-
3. Nuclear Pow­er Gen­er­a­tion Plant	‑do-
4. Trans­mis­sion lines, cables and oth­er net­work assets	‑do-
5. Wind Pow­er Gen­er­a­tion Plant	22 Years
6. Elec­tric Dis­tri­b­u­tion Plant	35 Years
7. Gas Stor­age and Dis­tri­b­u­tion Plant	30 Years
8. Water Dis­tri­b­u­tion Plant includ­ing pipelines	‑do-
(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
2. Baux­ite crush­ing and grind­ing sec­tion [NESD]	‑do-
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
2. Dis­til­la­tion Columns	‑do-
3. Dry­ing equipments/Centrifuges and Decanters	‑do-
4. Vessel/storage tanks	‑do-
(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	‑do-
(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

Notes—

 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. Use­ful life spec­i­fied in Part C of the Sched­ule is for whole of the asset. 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.

5.  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.

 6.  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, shall be recog­nised in the open­ing bal­ance of retained earn­ings where the remain­ing use­ful life of an asset is nil.

7.  “Con­tin­u­ous process plant” means a plant which is required and designed to oper­ate for twen­ty-four hours a day.