Is depreciation optional under the Income-tax Act?

No. Depreciation is a statutory allowance and must be claimed whether or not it is charged in the books, under Explanation 5 to section 32(1) of the Income-tax Act, 1961 and section 33 of the Income-tax Act, 2025.

When does the half rate of depreciation apply?

When an asset is acquired and put to use for less than 180 days during the previous year, depreciation is restricted to 50% of the applicable rate. The test is the period of use, not the date of purchase.

What is additional depreciation?

Additional depreciation is 20% of the actual cost of eligible new plant and machinery acquired by a business engaged in manufacture or production, or in the generation, transmission or distribution of power. It is 10% where the asset is put to use for less than 180 days, with the balance 10% allowed in the following year.

What happens when all assets in a block are sold?

No depreciation is allowed for that year. Any balance is a short-term capital loss, and any excess of consideration over the block value is a short-term capital gain under section 50 of the Income-tax Act, 1961, corresponding to section 74 of the Income-tax Act, 2025.

Which section of the Income-tax Act, 2025 replaces section 32?

Section 33 of the Income-tax Act, 2025 provides for the deduction for depreciation. Actual cost is dealt with in section 39, written down value in section 41 and the charge on transfer of depreciable assets in section 74.

Income-tax tool

Depreciation Calculator

Build a complete depreciation schedule in one place. Add each block of assets in turn — plant and machinery at every rate, buildings, furniture and fittings, ships and intangibles — and the tool consolidates them into a single working with block-wise and total depreciation, additional depreciation and the closing WDV to carry forward.

Section 32, Income-tax Act, 1961 Section 33, Income-tax Act, 2025 (from 1 April 2026) Rule 5 & New Appendix I All blocks in one schedule

Block of assets	Rate	Opening WDV	Additions 180 days +	Additions under 180 days	Deletions	Normal depreciation	Additional depreciation	Total depreciation	Closing WDV
Total		₹0	₹0	₹0	₹0	₹0	₹0	₹0	₹0

Method

How the calculation works

Depreciation under the Income-tax Act is allowed on the written-down value of a block of assets, not asset by asset. Assets carrying the same rate and the same nature form one block; additions go into the block and sale proceeds come out of it.

Full-rate base

Opening WDV, plus additions put to use for 180 days or more, less money payable on assets sold, discarded or destroyed. Depreciation is charged at the full block rate.

Half-rate base

Additions put to use for less than 180 days in the previous year, less any realisation out of those additions. Depreciation is charged at 50% of the block rate.

Additional depreciation

20% of the actual cost of eligible new plant and machinery, or 10% if put to use for less than 180 days — with the remaining 10% allowed in the following year. Second-hand plant, office appliances, road transport vehicles, ships, aircraft and anything installed in office or residential premises are excluded.

When the block goes to nil

If sale consideration equals or exceeds the block value, no depreciation is allowed and the excess is a short-term capital gain under section 50 (section 74 of the Income-tax Act, 2025). No depreciation is allowed either if every asset in the block is transferred, even where a balance remains.

One row per block

A block is a group of assets of the same class carrying the same rate. Plant and machinery at 15%, at 30% and at 40% are three separate blocks and get three rows. Buildings at 5% and at 10% are two more. Enter each one, add it to the schedule, and the totals build up as you go.

Succession, amalgamation and demerger

Where a business changes hands during the year, the depreciation for that year is apportioned between predecessor and successor in the ratio of the number of days the assets were used by each. This calculator computes the full-year figure; the apportionment is applied after that.

Statutory map, 1961 to 2025

Depreciation moves from section 32 to section 33. Actual cost moves from section 43(1) to section 39, written down value from section 43(6) to section 41, and the balancing charge on depreciable assets from section 50 to section 74.

New Appendix I to the Income-tax Rules, 1962

Depreciation rate chart

Rates admissible as a percentage of written down value, effective from assessment year 2018-19 onwards and carried into the Income-tax Act, 2025 regime.

Block	Description of asset	Rate

Goodwill of a business or profession is not a depreciable asset with effect from assessment year 2021-22. Buildings include roads, bridges, culverts, wells and tubewells. A building is treated as residential if at least 66⅔% of its built-up floor area is used for residential purposes.

Questions we are asked

Depreciation, in practice

Is depreciation optional?

No. Depreciation is a statutory allowance and must be claimed whether or not it is charged in the books. Explanation 5 to section 32(1) makes it mandatory, and the same position continues under section 33 of the Income-tax Act, 2025.

What counts as "180 days"?

The test is the number of days the asset was put to use during the previous year, not the date of purchase. An asset acquired in July but first used in December gets the half rate. For a 365-day previous year, an asset first used on or before 3 October qualifies for the full rate.

Can I claim depreciation on an asset used for only part of the year?

Yes. Once an asset enters the block, depreciation is computed on the block as a whole. The 180-day restriction applies only in the year the asset is first put to use; from the following year the full rate applies.

Is additional depreciation still available?

It survives in the statute, but is denied where the assessee has opted for the concessional regimes under sections 115BAA, 115BAB, 115BAC, 115BAD or 115BAE. Since the regime under section 115BAC is now the default for individuals, HUFs, AOPs and BOIs, most non-corporate assessees will not be able to claim it. Check your regime before selecting a rate above.

What happens if I sell every asset in a block?

No depreciation is allowed for that year even if a written-down value remains. The balance becomes a short-term capital loss under section 50; if the consideration exceeds the block value, the excess is a short-term capital gain.

Which sections replace section 32 under the Income-tax Act, 2025?

Depreciation is dealt with in section 33, actual cost in section 39, written down value in section 41 and the balancing charge on depreciable assets in section 74. The rate schedule continues in substantially the same form.

Does the calculator handle power undertakings on the straight line method?

Not yet. Undertakings engaged in generation or generation and distribution of power may claim depreciation on the straight line method at the rates in Appendix IA on each asset separately. This tool covers the written-down-value block method only.

Professional assistance

Getting the block right matters more than the arithmetic

Classification of an asset into the correct block, the timing of "put to use", capitalisation of borrowing cost and foreign exchange differences, and the treatment on sale of a block are where most depreciation disputes begin. We advise on depreciation schedules, tax audit reporting in Form 3CD and the transition to the Income-tax Act, 2025.

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