Depreciation on plants and machinery directly affects taxable income under the Income Tax Act (ITA). Applying the correct rate and method is essential, whether calculating the AC depreciation rate for air conditioners or rates for industrial and specialised equipment. Correct classification and adherence to rules such as the block of assets and half-year convention ensure compliant and precise tax claims.
Key depreciation rates for equipment & machinery
The following tables show standard and specialised depreciation rates for various equipment and machinery categories under the ITA.
-
General Depreciation Rates
|
S. No. |
Equipment Category |
Depreciation Rate (%) |
|
1 |
General machinery & plant |
15% |
|
2 |
Motor cars (non-hire use) |
15% |
|
3 |
Motor cars (Aug 2019–Apr 2020) |
30% |
|
4 |
Motor buses, lorries, taxis (on hire) |
30% |
|
5 |
Motor buses, lorries, taxis (special period) |
45% |
|
6 |
Aeroplanes & aero engines |
40% |
|
7 |
Moulds (rubber & plastic industry) |
30% |
-
Industry-Specific Equipment
|
Equipment Type |
Rate |
|
Semiconductor manufacturing equipment |
30% |
|
Textile machinery (TUFS) |
40% |
|
Weaving/processing garment machinery |
40% |
|
Glass/plastic refill containers |
40% |
-
Medical Equipment
|
Equipment Type |
Rate |
|
MRI machines |
40% |
|
Ventilators |
40% |
|
Defibrillators |
40% |
|
Surgical lasers |
40% |
|
Endoscopes & laparoscopes |
40% |
|
Angiography systems |
40% |
-
Special Purpose Equipment
|
Equipment Type |
Rate |
|
Water supply / treatment machinery |
40% |
|
Wooden parts (textile/artificial silk machinery) |
40% |
|
Cinematograph equipment (excluding bulbs) |
40% |
|
Salt works equipment |
40% |
|
Flour mill rollers |
40% |
|
Steel & sugar industry rollers |
40% |
-
Energy-Saving Equipment
|
Equipment Type |
Rate |
|
Boilers & furnaces (high efficiency) |
40% |
|
Heat recovery systems |
40% |
|
Co-generation systems |
40% |
|
Energy monitoring instruments |
40% |
|
Burners (low excess air / high efficiency) |
40% |
|
Load controllers & energy devices |
40% |
-
Electrical & Industrial Equipment
|
Equipment Type |
Rate |
|
Gas cylinders |
40% |
|
Glass manufacturing furnaces |
40% |
|
Oil industry field equipment |
40% |
-
Renewable Energy Equipment
|
Equipment Type |
Rate |
|
Solar panels & modules |
40% |
|
Solar water heaters |
40% |
|
Solar pumps |
40% |
|
Windmills |
40% |
|
Biogas plants |
40% |
|
Electrically operated vehicles |
40% |
Depreciation rate as per Companies Act, 2013
Under the Companies Act, 2013, depreciation for machinery and plant is based on the asset’s useful life as defined in Schedule II, rather than fixed percentage rates like those in the Income Tax Act.
Conclusion
Accurate depreciation affects both your tax liability and financial records. Even assets such as air conditioners require correct classification to apply the AC depreciation rate. As your business and asset base grow, manual tracking can lead to errors. Use TallyPrime to maintain organised asset records and generate reliable reports, ensuring depreciation is calculated correctly each time.
