Depreciation Calculator – SLM & WDV Method India

Depreciation Kya Hoti Hai? (Simple Explanation)

Ek chhote business owner ne ₹5 lakh ki machinery kharidi. Uska accountant bola: "Iska poora ₹5 lakh is saal expense nahi kar sakte — depreciation calculate karni padegi." Aur tabhi shuru hoti hai confusion.

Jab aap koi fixed asset — machinery, vehicle, computer, building — kharidta hai, woh ek din mein expense nahi hoti. Uski cost uski puri useful life mein phailti hai. Har saal ek portion expense kiya jaata hai — yeh hai depreciation.

Tax saving: Depreciation taxable income reduce karti hai — businesses ke liye significant annual tax benefit
Correct profit: Without depreciation, profit overstated hogi — wrong financial picture
Asset valuation: Balance sheet mein asset ki current book value accurately dikhni chahiye
Compliance: Companies Act 2013 aur Income Tax Act dono ke prescribed methods follow karne zaroori hain

Important: Companies Act aur IT Act ke depreciation methods alag hain — ek hi asset ke liye dono alag calculations maintain karni padti hain. Book profit aur taxable profit differ karte hain — yeh Deferred Tax Asset/Liability create karta hai. faydemand.in calculator dono simultaneously calculate karta hai.

Income Tax Act Depreciation Rates FY 2025-26 (WDV Method)

Asset Category	IT Act WDV Rate	Companies Act Useful Life	Section
Buildings (residential)	5%	60 years	Appendix I, Block 1
Buildings (commercial/factory)	10%	30-60 years	Appendix I, Block 1
Furniture & Fittings	10%	10 years	Appendix I, Block 2
Plant & Machinery (general)	15%	15-25 years	Appendix I, Block 3
Computers & Peripherals	40%	3 years	Appendix I, Block 3
Motor Vehicles (non-transport)	15%	8 years	Appendix I, Block 3
Motor Vehicles (transport operators)	30%	8 years	Appendix I, Block 3
Ships	20%	25 years	Appendix I, Block 4
Aircraft	40%	20 years	Appendix I, Block 4
Intangibles (patent, copyright, know-how)	25%	As per contract/10 yrs	Appendix I, Block 5

+ Additional 20% depreciation in Year 1 for new P&M in manufacturing (Section 32(1)(iia)). Goodwill pe depreciation Budget 2021 se allowed nahi hai.

Depreciation Kaise Calculate Karte Hain — Step by Step

1

Asset Details Identify Karo Original purchase price (freight + installation + taxes — capitalized cost), estimated scrap/residual value at end of useful life (generally 5% for Companies Act), aur asset category (machinery, building, vehicle, computer, furniture). Date of purchase bhi note karo — mid-year rule ke liye.

2

Applicable Method Decide Karo SLM: Companies Act compliance ke liye, equal annual charges prefer karte ho toh. WDV: Income Tax purposes ke liye, tax planning ke liye, block of assets concept ke liye. Dono simultaneously: book depreciation vs tax depreciation comparison ke liye — deferred tax working mein.

3

SLM Calculate Karo Depreciable Amount = Cost – Scrap Value. Annual SLM Depreciation = Depreciable Amount ÷ Useful Life (years). Yeh fixed amount har saal lagta hai jab tak book value scrap value tak reach na kare. Simple aur predictable.

4

WDV Calculate Karo Year 1: Opening WDV (= Cost) × Rate%. Year 2 onwards: Previous year closing WDV × Rate%. Har saal depreciation kam hoti hai (declining balance). IT Act mein 180 days rule: October ke baad kharida — first year half depreciation only.

5

Tax Saving Calculate Karo Tax Saving = Annual Depreciation × Tax Rate × 1.04 (cess included). WDV method pehle saalon mein zyada depreciation deta hai → zyada early year tax saving → better cash flow. faydemand.in calculator har saal tax saving separately dikhata hai complete schedule mein.

3 Real-Life Worked Examples

Example 1 Machinery — SLM vs WDV Comparison (₹8 Lakh Asset)

Raj's manufacturing business purchases a machine for ₹8,00,000. Useful life: 8 years. Scrap value: ₹40,000. Tax bracket: 30%. Comparing SLM vs IT Act WDV (15%).

Year	SLM Dep.	SLM Book Value	WDV Dep. (15%)	WDV Book Value
1	₹95,000	₹7,05,000	₹1,20,000	₹6,80,000
2	₹95,000	₹6,10,000	₹1,02,000	₹5,78,000
3	₹95,000	₹5,15,000	₹86,700	₹4,91,300
5	₹95,000	₹3,25,000	₹62,641	₹3,54,964
8	₹95,000	₹40,000 (scrap)	₹41,775	₹2,36,725

Year 1 Tax Saving: SLM = ₹95,000 × 30% × 1.04 = ₹29,640 | WDV = ₹1,20,000 × 30% × 1.04 = ₹37,440. WDV Year 1 saves ₹7,800 more. But SLM fully depreciates asset — WDV leaves ₹2.36L book value after 8 years.

Example 2 Computer — Income Tax Block Method (Mid-Year Purchase)

Priya's IT consultancy bought a laptop on October 15, 2025 for ₹1,20,000. Computer block — IT Act rate 40%. October 15 to March 31 = ~167 days (less than 180 days) → half-year depreciation applies in Year 1.

Year 1 (half-year)	₹1,20,000 × 40% × 50% = ₹24,000 \| WDV ₹96,000
Year 2	₹96,000 × 40% = ₹38,400 \| WDV ₹57,600
Year 3	₹57,600 × 40% = ₹23,040 \| WDV ₹34,560
Year 4	₹34,560 × 40% = ₹13,824 \| WDV ₹20,736
Year 5	₹20,736 × 40% = ₹8,294 \| WDV ₹12,442

Total 5-year depreciation: ₹1,07,558. Total 5-year tax saving (30%): ₹33,559. If same laptop was bought in May instead — full Year 1 depreciation ₹48,000 (double the benefit in Year 1).

Example 3 Factory Building — Companies Act vs IT Act Difference

ABC Limited acquires factory building ₹2,00,00,000. Companies Act Schedule II: factory buildings useful life 30 years, 5% residual value, SLM. vs Income Tax Act: 10% WDV.

Companies Act SLM Annual Dep.	₹1,90,00,000 ÷ 30 = ₹6,33,333/year
IT Act WDV Year 1 Dep.	₹2,00,00,000 × 10% = ₹20,00,000
IT Act WDV Year 2 Dep.	₹1,80,00,000 × 10% = ₹18,00,000
Year 1 Difference	₹20,00,000 − ₹6,33,333 = ₹13,66,667 more (IT Act)
Year 1 Extra Tax Saving (25% rate)	₹13,66,667 × 25% = ₹3,41,667
Deferred Tax Liability (Year 1)	₹13,66,667 × 25% = ₹3,41,667

IT Act allows ₹20L depreciation Year 1 vs Companies Act ₹6.33L. This ₹13.66L timing difference creates Deferred Tax Liability on balance sheet. Companies must maintain both calculations separately.

Depreciation Formulas

functions Formula

              SLM Annual Depreciation  = (Cost − Scrap Value) ÷ Useful Life (years)

              SLM Depreciation Rate    = [(Cost − Scrap) ÷ (Cost × Life)] × 100

              WDV Year 1 Depreciation  = Cost × Rate%

              WDV Year N Depreciation  = Opening WDV × Rate%

              WDV Rate (from SLM params) = 1 − (Scrap ÷ Cost)^(1/n)

              IT Block Depreciation    = (Opening WDV + Full-Year Additions

                                      + 0.5 × Half-Year Additions − Disposals) × Rate%

              Tax Saving per Year      = Annual Depreciation × Tax Rate × 1.04

              Net After-Tax Asset Cost = Purchase Price − (Sum of all Tax Savings)

7 Depreciation Tax-Planning Tips

WDV Se Early Year Maximum Tax Saving Lo

IT Act WDV method front-loads depreciation — pehle saalon mein zyada deduction. ₹20L machinery par Year 1 WDV (15%) = ₹3L depreciation vs SLM ₹1.9L. 30% bracket mein ₹33,800 more tax saving in Year 1. faydemand.in calculator pe WDV schedule dekho aur first year benefit clearly quantify karo.

Computer 40% Rate — Fastest Depreciation

Computers pe 40% WDV rate hai — IT Act ki sabse high standard rate. ₹1L computer: Year 1 ₹40,000 depreciate hota hai (ya ₹20,000 agar second half mein kharida). Technology assets quickly obsolete hote hain. Business computer purchase pe actual after-tax cost significantly lower hoti hai — calculator se exact figure nikalo.

180 Days Rule — Purchase Timing Plan Karo

Asset April 1–September 30 mein kharida → full year depreciation. October 1–March 31 mein kharida → half year only. Bada asset kharidna ho — April-September mein kharidna double benefit deta hai Year 1 mein vs October mein khareedna. Tax planning mein purchase timing deliberately consider karo.

Manufacturing Units — Additional 20% Claim Karo

Section 32(1)(iia) — new P&M pe first year mein normal WDV ke upar 20% extra. ₹20L machinery → Year 1 total depreciation = 15% + 20% = 35% = ₹7L. Tax saving = ₹7L × 30% × 1.04 = ₹2,18,400. Is benefit ko claim karna miss mat karo — significant investment incentive hai. Backward area mein hai toh 35% additional.

Block Concept — Individual Asset Tracking Nahi

IT Act mein individual asset pe depreciation track karna required nahi — block level pe karo. Sab 15% assets ek block mein. Koi machinery sell karo — block WDV se sale value minus. Block level pe simplicity milti hai especially zyada assets wale businesses ke liye. Books of accounts ke liye individual WDV — tax ke liye block WDV maintain karo.

Intangible Assets — 25% WDV Claim Karo

Purchased intangible assets (patents, copyrights, trademarks, licenses, know-how) — 25% WDV rate under IT Act. Self-generated intangibles deductible nahi. Goodwill: Budget 2021 se depreciation allowed nahi. Software separately capitalized — computer block mein 40%. Software bundled with computer — computer rate hi apply hoti hai.

Fixed Asset Register — Maintain Karo Properly

Har business ko fixed asset register maintain karna chahiye — each asset ka: description, purchase date, cost, accumulated depreciation, current book value, IT Act WDV, location, serial number. faydemand.in calculator ki depreciation schedule seedha register mein use hoti hai. Audit aur ITR filing Schedule DPM mein yeh register critical document hai.

Is Calculator Se Kya Fayda Hoga?

Teen Methods Ek Calculator Mein SLM, WDV, aur IT Block — teeno methods ek tool mein. Pehle alag-alag manually calculate karna padta tha — time-consuming aur error-prone. Companies ke liye — dono books aur tax depreciation ek saath. CA professionals ke liye — client calculations faster. Students ke liye — comparison immediate dikhta hai.

Complete Year-wise Schedule Sirf "annual depreciation ₹X hai" nahi — poora year-by-year schedule: opening WDV, depreciation charge, accumulated depreciation, closing WDV, annual tax saving. Schedule directly fixed asset register aur balance sheet mein use hota hai. Kisi bhi specific year ki book value instantly pata chalti hai.

Tax Saving Quantification Calculator annual tax saving clearly dikhata hai — depreciation × tax rate × 1.04. ₹5 lakh machinery pe 30% bracket mein Year 1 IT WDV tax saving = ₹23,400. Yeh concrete number business investment decisions support karta hai — "asset ka after-tax cost kya hai?" — instant answer.

Mid-Year Purchase Automatic Adjustment 180 days rule manually calculate karna confusing hota hai. Calculator purchase date enter karne pe automatically checks whether full or half-year depreciation applies — aur schedule adjust karta hai. Ek common ITR error source completely eliminate ho jaata hai.

Business, Accounting, aur Education — Sab Ke Liye Business owners: tax planning aur ITR Schedule DPM filing. Accountants/CAs: client work faster aur deferred tax workings. Finance students: CA/CMA/MBA exam preparation. Startups: asset investment analysis aur projections. MSMEs: simple depreciation tracking bina expensive software ke.

Depreciation Ke Common Mistakes

Galti 1 — SLM aur WDV Rate Confuse Karna

SLM rate = (Cost – Scrap) / (Cost × Life) — cost basis pe. WDV rate IT Act mein prescribed fixed percentage hai (15%, 40% etc.) — reducing balance pe. Dono ek nahi hain. ₹1L asset, 10 years, 5% scrap: SLM rate ≈ 9.5% on cost. WDV rate for same effective life ≈ 26% on reducing balance. IT Act prescribed WDV rates ko SLM rate ki tarah use mat karo.

Galti 2 — Goodwill Pe Depreciation Claim Karna

Budget 2021 se goodwill pe depreciation allowed nahi hai under IT Act — specifically amended. Agar acquired goodwill kisi block mein tha — usse remove karna tha. Kuch accountants abhi bhi claim karte hain galti se — yeh incorrect hai aur tax demand ke saath interest/penalty lag sakta hai.

Galti 3 — Half-Year Rule Miss Karna

October mein kharidi machinery pe first year half depreciation — bahut log full depreciation claim kar lete hain. Yeh IT Act violation hai. Calculator purchase date automatically check karta hai — lekin manually calculate karte waqt date carefully note karo. Half-year rule only IT Act mein — Companies Act proportionate depreciation from actual use date follow karta hai.

Galti 4 — Second-Hand Machinery Ko Additional Depreciation Claim Karna

Section 32(1)(iia) additional 20% depreciation sirf NEW plant aur machinery ke liye hai — second-hand ya used machinery ke liye nahi. Agar pre-owned machinery kharidi — normal WDV depreciation hi claim karo, additional 20% nahi. Yeh common error audit mein frequently caught hota hai aur penalty lagti hai.

Galti 5 — Block Concept Mein Individual Asset Loss/Gain Claim Karna

Block of assets concept mein: sirf kuch assets ek block se sell kiye — individual asset pe gain/loss calculate nahi hota — sirf block WDV reduce hoti hai. Loss tabhi claim hoti hai jab sab assets ek block se sell ho jaayein aur block WDV positive reh jaaye. Individual asset basis pe STCL claim karna IT Act violation hai.

Real-World Use Cases

Manufacturer — New Machinery Tax Planning Vikram, garment manufacturer, ₹20L ki new cutting machine July 2025 mein kharidi. 30% tax bracket. Calculator: IT Act 15% WDV + 20% additional (manufacturer). Year 1 depreciation = ₹20L × 35% = ₹7L. Tax saving = ₹7L × 30% × 1.04 = ₹2,18,400. After-tax effective cost = ₹20L – ₹2.18L = ₹17.82L. Clear investment decision — calculator ne concrete number diya.

IT Firm — Computer Block Tracking Priya's IT company: opening computer block WDV = ₹3,50,000. New laptops May 2025 = ₹2,00,000 (full year, 40% → ₹2,20,000 dep). New server October 2025 = ₹5,00,000 (half year, 40% × 50% → ₹1,00,000 dep). Total depreciation = ₹3,20,000. Tax saving = ₹99,840. Calculator ne complex multi-asset block calculation instantly handle kiya.

Company — Deferred Tax Working ABC Pvt Ltd bought factory ₹1.5 crore. Companies Act SLM annual dep = ₹4,75,000. IT Act WDV Year 1 = ₹15,00,000. Timing difference = ₹10,25,000. Deferred Tax Liability = ₹10,25,000 × 25% = ₹2,56,250. faydemand.in calculator dono methods simultaneously dikhaya — accountant used for deferred tax workings, clean audit report mila.

Small Business — Vehicle Depreciation Renu, travel agency owner, ₹12L ka SUV kharida. 70% business, 30% personal. IT Act 15% WDV on ₹12L × 70% = ₹8.4L business portion. Year 1 depreciation = ₹1,26,000 (not full ₹1.8L). Tax saving (20% bracket) = ₹26,208. Calculator helped Renu correctly claim business proportion — avoid personal use disallowance issue in assessment.

CA Student — Exam Preparation Akash, CA Final student, depreciation chapter difficult lagta tha — SLM vs WDV comparison, block concept, mid-year adjustments. faydemand.in calculator se numerical practice ki: entered various scenarios, saw results instantly, verified with textbook. When numbers matched — conceptual clarity aaya. Exam mein depreciation question perfectly attempted — calculator as a learning tool.

Frequently Asked Questions

What is depreciation and why is it calculated?expand_more

Depreciation ek accounting concept hai jisme kisi fixed asset (machinery, vehicle, building, equipment) ki cost ko uski useful life mein systematically allocate kiya jaata hai. Kyun calculate karte hain: (1) Accurate profit calculation — asset cost ko revenue se match karo; (2) Tax benefit — IT Act mein depreciation deductible expense hai — taxable income reduce hota hai; (3) Balance sheet accuracy — asset ki current book value correctly dikhni chahiye. Non-cash expense hai — cash flow affect nahi karta but tax benefit real hota hai.

What is the difference between SLM and WDV depreciation methods?expand_more

SLM — equal annual depreciation throughout life: (Cost – Scrap) / Useful Life. Simple, predictable, Companies Act mein common. WDV — declining balance: fixed percentage on reducing book value. Pehle saalon mein zyada depreciation, baad mein kam. IT Act mein WDV method use hota hai. Key difference: SLM asset fully depreciates to scrap value; WDV asset kabhi technically zero nahi hoti. WDV better for tax cash flow in early years; SLM better for consistent accounting charges.

What are the depreciation rates under Income Tax Act?expand_more

IT Act WDV rates: Buildings (residential) 5%, Buildings (commercial/factory) 10%, Furniture aur Fittings 10%, General Plant & Machinery 15%, Computers aur peripherals 40%, Motor vehicles (non-transport) 15%, Motor vehicles (transport operators) 30%, Aircraft 40%, Ships 20%, Intangible assets (patent, copyright, know-how) 25%. New industrial machinery manufacturers ko first year mein normal WDV ke upar 20% additional depreciation bhi milti hai (Section 32(1)(iia)).

What is the Companies Act depreciation method?expand_more

Companies Act 2013 Schedule II ke under companies ko asset ki cost prescribed useful life pe allocate karni hoti hai — residual value 5% rakho generally. Method choice: SLM ya WDV. Useful lives: Buildings 30-60 years, Plant/Machinery 5-25 years, Computers 3 years, Vehicles 8 years, Furniture 10 years. Consistency principle: ek baar method choose kiya toh change pe accounting policy change disclosure zaroori. faydemand.in calculator Companies Act useful lives pre-loaded hai.

What is additional depreciation under Income Tax Act?expand_more

Section 32(1)(iia) ke under manufacturing ya production units ko new plant aur machinery ke first year mein normal WDV depreciation ke upar 20% additional depreciation milti hai. Backward areas mein 35%. Conditions: manufacturing business, brand new machinery (not second-hand), not office appliances or vehicles. Yeh investment incentive hai — manufacturers ke liye significant first-year tax benefit. Calculator mein manufacturing checkbox select karne pe automatically include hoti hai.

How is depreciation calculated on assets purchased mid-year?expand_more

IT Act mein 180 days rule: April 1 se September 30 mein kharida (180+ days use) → full year depreciation. October 1 se March 31 mein kharida (less than 180 days) → half year depreciation (50% of normal). Companies Act mein: actual date of use se proportionate depreciation. Example: November mein kharidi machinery — IT Act half depreciation, Companies Act 5/12 months proportionate. faydemand.in calculator purchase date enter karne pe automatically correct adjustment karta hai.

Can I claim depreciation on a car used for business?expand_more

Haan — business use vehicles pe depreciation claim ho sakti hai. IT Act rates: non-transport motor vehicles 15% WDV, transport operator vehicles 30% WDV. Mixed use (business + personal): sirf business use proportion pe depreciation claimable hai. Full car cost pe depreciation claim karna aur phir personal benefit pe challenge hona risky hai. Business use percentage document karo — logbook maintain karo — audit mein helpful hota hai.

What is block of assets concept in Income Tax?expand_more

IT Act mein individual asset basis pe depreciation nahi — block concept: same depreciation rate wale sab assets ek block mein. Opening WDV + additions – sale proceeds = net block. Is net block pe prescribed rate se depreciation. Koi asset sell karein — block WDV se minus hoti hai sale value. Sab assets ek block se sell ho jaayein aur net WDV positive bache → short-term capital gain. Block WDV negative ho jaaye → STCG chargeable. faydemand.in block calculator se easily compute karo.

What is the depreciation rate for computers in India?expand_more

Computers aur computer peripherals pe Income Tax Act under 40% WDV rate hai — sabse high standard rate. Example: ₹1 lakh computer. Year 1: ₹40,000 depreciation, WDV ₹60,000. Year 2: ₹24,000, WDV ₹36,000. Year 3: ₹14,400, WDV ₹21,600. Companies Act ke under computers ki useful life 3 years — approximately 33.33% per year SLM. Technology obsolescence ki wajah se high rate justified hai. Phones, tablets, printers bhi computer peripherals mein count hote hain generally.

Is depreciation a cash expense?expand_more

Nahi — depreciation non-cash expense hai. Cash outflow sirf tab hoti hai jab asset kharidaa jaata hai. Depreciation sirf cost ko time period mein allocate karta hai — har saal actual cash payment nahi hota. Isliye Cash Flow Statement mein P&L profit mein depreciation add back karte hain operating cash flow calculate karne ke liye. Tax planning mein depreciation extremely powerful hai — taxable income reduce karta hai aur tax saving real cash benefit hai bina koi additional outflow ke.

Asset Depreciation Planning Abhi Shuru Karo

Calculator mein asset cost, useful life aur method enter karo — instantly SLM vs WDV comparison, year-wise depreciation schedule, aur annual tax saving dikhengi. Free hai, instant hai, koi login nahi chahiye.

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