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Depreciation: Companies Act vs Income Tax Comparator.

One asset, two entirely different depreciation books: Schedule II’s useful-life-based SLM/WDV for the financial statements, and the Income Tax Act’s block-of-assets WDV — with its own 180-day half-rate rule — for the tax computation. The deferred-tax gap starts right here.

Inputs
Asset class
Original cost (₹)
Date put to use
Financial year end
Result — first year
Days used this financial year: 168 (< 180 days — IT half-rate rule applies)
Companies Act · Schedule II
Useful life15 years
SLM rate (annual, 5% residual)6.33%
SLM — first year₹29,151
WDV rate (annual, 5% residual)18.10%
WDV — first year₹83,326
Income Tax · Block WDV
Block ratePlant & machinery — general (15%)
Rate applied (180-day rule)7.50%
Depreciation — first year₹75,000

Two books, one asset, and a deferred-tax line.

The gap between Schedule II’s useful-life depreciation and the Income Tax block-of-assets WDV figure is exactly what feeds AS 22 / Ind AS 12 deferred tax on fixed assets — a temporary difference that reverses over the asset’s life as the two books converge to the same total depreciable amount by different paths and at different speeds.

Full Schedule II calculatorDeferred tax calculator

How the two depreciation systems differ

Schedule II to the Companies Act 2013 prescribes a USEFUL LIFE per asset class (e.g. 60 years for an RCC-frame building, 10 years for general furniture, 3 years for end-user computer devices) with a residual value capped at 5% of original cost. From that life, both an SLM rate — (cost − 5%)/life, straight-line every year — and a WDV rate — 1 − (5%)^(1/life), a declining rate on the reducing balance — can be derived; a company may choose either method per asset class.

The Income Tax Act uses a completely different mechanism: assets are grouped into BLOCKS (not individual assets), each block carrying a single prescribed WDV rate under Appendix I (5-40% depending on the block) — there is no SLM option and no concept of individual asset useful life. Depreciation is charged on the block's aggregate written-down value, not asset by asset.

The 180-day rule is an Income Tax Act-only concept: an asset put to use for LESS than 180 days in the year of acquisition gets only HALF the block's prescribed rate for that year (the balance becomes part of the block's opening WDV for the following year, depreciated at the full rate from then). Schedule II has no equivalent all-or-half cutoff — its depreciation is prorated by actual days used, not stepped at a 180-day threshold.

Worked example — plant & machinery, ₹10 lakh, used 168 days

General plant & machinery costing ₹10,00,000, put to use on 15 October 2025, financial year ending 31 March 2026 — 168 days of use in the year (below the 180-day threshold).

Inputs
Schedule II useful life15 years (general plant & machinery)
Schedule II SLM rate95% ÷ 15 = 6.33% per year
Schedule II WDV rate1 − (5%)^(1/15) ≈ 18.1% per year
IT block rate15% (general plant & machinery), HALVED to 7.5% — used < 180 days
Output
Schedule II SLM, first year (pro-rated for 168/365 days)₹10,00,000 × 6.33% × 168/365 ≈ ₹29,151
Schedule II WDV, first year (pro-rated)₹10,00,000 × 18.1% × 168/365 ≈ ₹83,326
Income Tax block WDV, first year₹10,00,000 × 7.5% = ₹75,000
Three different first-year figures from one asset and one cost. Income Tax (₹75,000) sits between the two book options here because the 180-day HALF rate (7.5%) still lands above the pro-rated SLM figure (₹29,151) but below the steeper pro-rated WDV figure (₹83,326) — the three systems reduce for partial-year use by entirely different mechanics (day-proration for both Schedule II methods vs a binary half-rate step for tax), so there is no general rule for which one comes out highest.

Common mistakes

Applying the 180-day half-rate rule to Schedule II depreciation
The 180-day binary cutoff is an Income Tax Act concept only. Schedule II depreciation is pro-rated by actual days used — there is no "half rate below 180 days" step in the Companies Act system.
Treating IT depreciation as asset-wise like Schedule II
Income Tax depreciation operates on BLOCKS of similar assets, not individual assets — a block's WDV is a single pooled figure, and gains/losses on individual asset sales within a block are absorbed into the block rather than computed asset-by-asset (until the block itself is emptied or extinguished).
Assuming Schedule II prescribes intangible-asset life
Schedule II Part C covers tangible fixed assets. Intangible assets are amortised per the applicable accounting standard (AS 26 / Ind AS 38) based on actual economic useful life — there is no statutory table figure to look up, unlike tangible assets.
Missing that a company can choose SLM or WDV per class, but IT law only offers WDV
Schedule II lets a company adopt SLM or WDV by asset class (with disclosure). The Income Tax Act permits WDV only for the general run of assets (Appendix I) — SLM under Appendix II is restricted to power generation/distribution undertakings.

Frequently asked questions

What is the 180-day rule in income tax depreciation?+
If an asset is put to use for less than 180 days in the year it is acquired, the depreciation allowed for that year is restricted to HALF the block's prescribed rate. The remaining depreciable value carries into the following year's opening WDV of the block, where it depreciates at the full rate from then on — the 180-day restriction applies only to the first year of use.
Is Schedule II depreciation the same as Income Tax depreciation?+
No — they are computed under entirely different mechanics. Schedule II uses an individual-asset useful life (SLM or WDV, company's choice) with a 5% residual value cap; the Income Tax Act uses block-of-assets WDV at a single rate per block, with no SLM option and no individual-asset useful life concept. The two produce genuinely different depreciation figures, which is exactly what creates a deferred tax temporary difference under AS 22 / Ind AS 12.
Does Schedule II prescribe a useful life for intangible assets?+
No — intangible assets are outside Schedule II Part C's tangible-asset useful-life table. They are amortised per the applicable accounting standard (AS 26 for AS-compliant entities, Ind AS 38 for Ind AS entities) based on the asset's actual economic useful life, assessed case by case.

Authoritative sources

Schedule II (Companies Act 2013) + Income Tax Act Appendix I depreciation rates — Schedule II figures and IT block rates verified 19 July 2026. Old Sec 32 (IT depreciation) maps to new Sec 33 under the Income Tax Act 2025 — verified 19 July 2026.
Always confirm against the latest version of the source. Regulations evolve and amendments are common.
Related calculators
Full Schedule II depreciation calculator →Deferred tax calculator →Schedule II useful-life reference table →
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Last reviewed: 2026-07-19 · For informational purposes only — not professional advice.