For the books, use the Schedule II depreciation calculator; to see the two side by side for one asset, the Companies Act vs Income Tax comparator. The gap between book and tax WDV feeds the deferred tax working.
Tax depreciation works on blocks, not individual assets. Assets of the same class that carry the same rate — all 15% plant and machinery, all 40% computers — form one block with a single written down value. For FY 2025-26 (assessment year 2026-27) the governing provision is Section 32 of the Income-tax Act, 1961, with the rates in Appendix I to the Income-tax Rules, 1962. The common ones are 5% for residential buildings, 10% for other buildings and for furniture and fittings, 15% for general plant and machinery and for motor cars, 30% for vehicles run on hire, 40% for computers and software, and 25% for intangibles such as know-how, patents, licences and franchises.
The WDV of a block for the year is its opening WDV, plus the actual cost of assets acquired during the year, less the money received or receivable for assets sold, discarded, demolished or destroyed. Depreciation is the block rate applied to that figure. One adjustment applies in the year of purchase: an asset acquired during the year and put to use for less than 180 days gets half the rate for that year. From the next year it is simply part of the block’s opening WDV and gets the full rate.
A sale does not produce a gain or loss asset by asset. The proceeds reduce the block. A capital gain arises only when the proceeds exceed the opening WDV plus additions, and a gain or loss also arises when every asset in the block has gone, so that the block ceases to exist. Either result is treated as short-term, and no depreciation is allowed on that block for the year.
Additional depreciation is a separate allowance: 20% of the actual cost of new plant or machinery for a business that manufactures or produces an article or thing, or generates, transmits or distributes power. Where the asset is used for less than 180 days in the first year, 10% is allowed that year and the remaining 10% the next. It is not available on second-hand machinery, office appliances, road transport vehicles, ships, aircraft, or machinery installed in an office or residential premises. Nor is it available to a taxpayer in a concessional regime — the 22% and 15% company rates or the new regime for individuals.
From 1 April 2026 the Income-tax Act, 2025 applies, and the first year under it is tax year 2026-27. Depreciation moves to Section 33 of that Act and the rates to the Income-tax Rules, 2026. The method is the same — WDV by block, the half rate for under 180 days, additional depreciation at 20% — and the main block rates carry over, so the closing WDV at 31 March 2026 becomes the opening WDV for tax year 2026-27. Check the rate table in the 2026 Rules for any less common asset before relying on a rate.
A company has a 15% plant and machinery block with an opening WDV of ₹40,00,000. During FY 2025-26 it buys machinery for ₹10,00,000 in June (used more than 180 days) and ₹6,00,000 in December (used less than 180 days), and sells an old machine for ₹5,00,000.
