Depreciation rates

Block of assets (sub-rule 1). Depreciation under section 33(3) on a block of assets in column (2) of the Table in Appendix I is calculated at the percentages in column (3) on the written down value of the block used for the business or profession at any time during the tax year. This is subject to sub-rule (7).

40% ceiling (sub-rule 2). For the persons in the Table, the depreciation allowance on a block cannot exceed 40% of the block's written down value if the conditions in column C are fulfilled: a domestic company that has exercised an option under section 199(3), 200(5) or 201(2); an individual, Hindu undivided family, association of persons or body of individuals (incorporated or not), or artificial juridical person referred to in section 2(77)(g), whose income is chargeable to tax under section 202(1); and a co-operative society resident in India that has exercised an option under section 203(5) or 204(2).

Power undertakings (sub-rules 3 to 6).

• Depreciation under section 33(2) on assets acquired on or after 1 April 1977, listed in Appendix II, is at the percentage in column (3) on the actual cost to the assessee (sub-rule 3).
• Total depreciation allowed under section 33(2) for an asset over all the years cannot exceed its actual cost (sub-rule 4).
• The undertaking may instead opt for depreciation under sub-rule (1) read with Appendix I, if it exercises the option on or before the due date for the return under section 263(1)(c) for the tax year in which it begins to generate power (sub-rule 5). The option is final and applies to all later tax years (sub-rule 6).

Plant using laboratory technology (sub-rules 7 and 8). New machinery or plant installed in a tax year beginning on or after 1 April 1987 for manufacturing or production is treated as part of a block of assets qualifying for depreciation at 40% of written down value, if the article is made using technology or know-how developed in, or is an article invented in, a laboratory owned or financed by the Government, or owned by a public sector company, a University, or an institution recognised by the Secretary, Department of Scientific and Industrial Research. Three conditions: the right to use the technology or to make the article was acquired from the laboratory's owner (or a person deriving title from it); the return for the tax year of acquisition carries a certificate from the Secretary, Department of Scientific and Industrial Research; and the plant is not used for an article in the Schedule XIII list. Sub-rule (8) defines "laboratory financed by the Government", "public sector company" and "University".

Where to find the rates. The percentages are in Appendices I and II of the Rules, not in the body of rule 25.