+91- 9938012228
MONDAY - SATURDAY: 7:30 AM - 6:00 PM

Depreciation as per Companies act :

  • 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. For the purpose of this Schedule, the term depreciation includes amortisation.
    • The useful life of an asset shall not be longer than the useful life specified in Part 'C' and the residual value of an asset shall not be more than five per cent of the original cost of the asset. Provided that where a company uses a useful life or residual value of the asset which is different from the above limits, justification for the difference shall be disclosed in its financial statement.

    • For intangible assets, the provisions of the accounting standards applicable for the time being in force shall apply, except in case of intangible assets (Toll Roads) created under 'Build, Operate and Transfer', 'Build, Own, Operate and Transfer' or any other form of public private partnership route in case of road projects. Amortisation in such cases may be done as follows.

(a) Mode of amortisation :—

(a) Mode of amortisation =        Amortisation Amount       
Cost of Intangible Assets(A)
Amortisation Amount =        Actual Revenue for the year (B)       
Projected Revenue from Intangible assets(C)

(b) Meaning of particulars are as follows :—

Cost of Intangible Assets (A) Cost incurred by the company in accordance with the accounting standards.
Actual Revenue for the year (B) Actual revenue (Toll Charges) received during the accounting year
Projected Revenue from Intangible Asset (C) Total projected revenue from the Intangible Assets as provided to the project lender at the time of financial closure/agreement.

The amortisation amount or rate should ensure that the whole of the cost of the intangible asset is amortised over the concession period.
Revenue shall be reviewed at the end of each financial year and projected revenue shall be adjusted to reflect such changes, if any, in the estimates as will lead to the actual collection at the end of the concession period

PART 'B'

3. 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.

PART 'C'

Subject to Parts A and B above, the following are the useful lives of various tangible assets:

>
NATURE OF ASSETS USEFUL LIFE YEARS SLM RATE % WDV RATE %
I. Buildings [NESD]
(a) Buildings (other than factory buildings) RCC Frame Structure 60 1.58 4.87
(b) Buildings (other than factory buildings) other than RCC Frame Structure 30 3.17 9.50
(c) Factory buildings 30 3.17 9.50
(d) Fences, wells, tube wells 5 19 45.07
(e) Others (including temporary structure, etc.) 3 31.67 63.16
II. Bridges, culverts, bunkers, etc. [NESD] 30 3.17 9.50
III. Roads [NESD]
(a) Carpeted roads
(i) Carpeted Roads—RCC 10 9.50 25.89
(ii) Carpeted Roads—other than RCC 5 19 45.07
(b) Non-carpeted roads 3 31.67 63.16
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 6.33 18.10
[(b) Continuous process plant for which no special rate has been prescribed under (ii) below [NESD] 5 11.88 31.23
(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 7.3120.56
2. Projecting equipment for exhibition of films
13 7.31 20.58
(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 7.31 20.58
2. Plant and Machinery except direct fire glass melting furnaces — Moulds [NESD] 8 11.88 31.23
3. Float Glass Melting Furnaces [NESD] 10 9.50 25.89
(c) Plant and Machinery used in mines and quarries—Portable underground machinery and earth moving machinery used in open cast mining [NESD] 8 11.88 31.23
(d) Plant and Machinery used in Telecommunications [NESD]
1. Towers 18 5.28 15.33
2. Telecom trans receivers, switching centres, transmission and other network equipment 13 7.31 20.58
3. Telecom—Ducts, Cables and optical fibre 18 5.28 15.33
4. Satellites 18 5.28 15.33
e) Plant and Machinery used in exploration, production and refining oil and gas [NESD]
1. Refineries 25 3.80 11.29
2. Oil and gas assets (including wells), processing plant and facilities 25 3.80 11.29
3. Petrochemical Plant 25 3.80 11.29
4. Storage tanks and related equipment 25 3.80 11.29
5. Pipelines 30 3.17 9.50
6. Drilling Rig 30 3.17 9.50
7. Field operations (above ground) Portable boilers, drilling tools, well-head tanks, etc. 8 11.88 31.23
8. Loggers 8 11.88 31.23
(f) Plant and Machinery used in generation, transmission and distribution of power [NESD]
1. Thermal/Gas/Combined Cycle Power Generation Plant 40 2.38 7.22
2. Hydro Power Generation Plant 40 2.38 7.22
3. Nuclear Power Generation Plant 40 2.38 7.22
4. Transmission lines, cables and other network assets 40 2.38 7.22
5. Wind Power Generation Plant 22 4.32 12.73
6. Electric Distribution Plant 35 2.71 8.20
7. Gas Storage and Distribution Plant 30 3.17 9.50
8. Water Distribution Plant including pipelines 30 3.17 9.50
(g) Plant and Machinery used in manufacture of steel
1. Sinter Plant 20 4.75 13.91
2. Blast Furnace 20 4.75 13.91
3. Coke ovens 20 4.75 13.91
4. Rolling mill in steel plant 20 4.75 13.91
5. Basic oxygen Furnace Converter 25 3.80 11.29
(h) Plant and Machinery used in manufacture of non-ferrous metals
1. Metal pot line [NESD] 40 2.38 7.22
2. Bauxite crushing and grinding section [NESD] 40 2.38 7.22
3. Digester section [NESD] 40 2.38 7.22
4. Turbine [NESD] 40 2.38 7.22
5. Equipments for Calcination [NESD] 40 2.38 7.22
6. Copper Smelter [NESD] 40 2.38 7.22
7. Roll Grinder 40 2.38 7.22
8. Soaking Pit 30 3.17 9.50
9. Annealing Furnace 30 3.17 9.50
10. Rolling Mills 30 3.17 9.50
11. Equipments for Scalping, Slitting, etc. [NESD] 30 3.17 9.50
12. Surface Miner, Ripper Dozer, etc., used in mines 25 3.80 11.29
13. Copper refining plant [NESD] 25 3.80 11.29
(i) Plant and Machinery used in medical and surgical operations [NESD]
1. Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories thereto, medical, 13 7.31 20.58
diagnostic equipment, namely, Cat- Scan, Ultrasound Machines, ECG Monitors, etc. 13 7.31 20.58
2. Other Equipments. 15 6.33 18.10
(j) Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD]
1. Reactors 20 4.75 13.91
2. Distillation Columns 20 4.75 13.91
3. Drying equipments/Centrifuges and Decanters 20 4.75 13.91
4. Vessel/storage tanks 20 4.75 13.91
(k) Plant and Machinery used in civil construction
1. Concreting, Crushing, Piling Equipments and Road Making Equipments 12 7.92 22.09
2. Heavy Lift Equipments—
Cranes with capacity of more than 100 tons
20 4.75 13.91
Cranes with capacity of less than 100 tons 15 6.33 18.10
3. Transmission line, Tunnelling Equipments [NESD] 10 9.50 25.89
4. Earth-moving equipments 9 10.56 28.31
5. Others including Material Handling /Pipeline/Welding Equipments [NESD] 12 7.92 22.09
(l) Plant and Machinery used in salt works [NESD] 15 6.33 18.10
V. Furniture and fittings [NESD]
(i) General furniture and fittings 10 9.50 25.89
(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 & marriages and similar functions. 8 11.88 31.23
VI. Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds 10 9.50 25.89
2. Motor buses, motor lorries, motor cars and motor taxies used in a business of running them on hire 6 15.83 39.30
3. Motor buses, motor lorries and motor cars other than those used in a business of running them on hire 8 11.88 31.23
4. Motor tractors, harvesting combines and heavy vehicles 8 11.88 31.23
5. Electrically operated vehicles including battery powered or fuel cell powered vehicles 8 11.88 31.23
VII. Ships [NESD]
1. Ocean-going ships
(i) Bulk Carriers and liner vessels 25 3.80 11.29
(ii) Crude tankers, product carriers and easy chemical carriers with or without conventional tank coatings 20 4.75 13.91
(iii) Chemicals and Acid Carriers :
(a) With Stainless steel tanks 25
(b) With other tanks 20
(iv) Liquified gas carriers 30 3.17 9.50
(v) Conventional large passenger vessels which are used for cruise purpose also 30 3.17 9.50
(vi) Coastal service ships of all categories 30 3.17 9.50
(vii) Offshore supply and support vessels 20 4.75 13.91
(viii) Catamarans and other high speed passenger for ships or boats 20 4.75 13.91
(ix) Drill ships 25 3.80 11.29
(x) Hovercrafts 15 6.33 18.10
(xi) Fishing vessels with wooden hull 10 9.50 25.89
(xii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging Purposes. 14 6.79 19.26
2. Vessels ordinarily operating on inland waters—
(i) Speed boats 13 7.31 20.58
(ii) Other vessels 28 3.39 10.15
VIII. Aircrafts or Helicopters [NESD] 20 4.75 13.91
IX. Railways sidings, locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns [NESD] 15 6.33 18.10
X. Ropeway structures [NESD] 15 6.33 18.10
XI. Office equipment [NESD] 5 19 45.07
XII. Computers and data processing units [NESD]
(i) Servers and networks 6 15.83 39.30
(ii) End user devices, such as, desktops, laptops, etc. 3 31.67 63.16
XIII. Laboratory equipment [NESD]
(i) General laboratory equipment 10 9.50 25.89
(ii) Laboratory equipments used in educational institutions 5 19 45.07
XIV. Electrical Installations and Equipment [NESD] 10 9.50 25.89
XV. Hydraulic works, pipelines and sluices [NESD] 15 6.33 18.10

[See Note 7 below this Table]

Note

1. "Factory buildings" does not include offices, go downs, 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.

The above detailed description related to depreciation which will be used by accountant and business concern in their respective field.

PreviousNext
read more
contact info
Po: kalyana nagar, Dt: cuttack,Odisha.
+91- 9938012228
What we do
”Company Name” directors have had vast earlier experience in financial services, investment banking, advising on, drafting and enforcing sales policies and processes.