Fridge Depreciation Rate: Practical Guide for Business Success

A refrigerator used for business is generally treated as plant and machinery for tax purposes, meaning its cost is depreciated over time to reflect wear and business use. Applying the correct depreciation rate affects both the deduction you can claim under the Income Tax Act (ITA) and the asset value reported in your books under the Companies Act, making accurate classification essential for compliant accounts and tax efficiency.

What is the fridge depreciation rate under the Income Tax Act, 1961?

Under Section 32 of the ITA 1961, a refrigerator used for business purposes is generally treated as plant and machinery under the normal residual block. This makes it eligible for depreciation at 15% under the written down value (WDV) method. Commercial refrigerators are not separately listed in the depreciation schedule but are generally classified under the broader plant and machinery category.

A business can claim depreciation only if all of the following conditions are met:

• The business owns the refrigerator
• The refrigerator is used for business purposes
• The refrigerator is actually put to use during the financial year

A refrigerator used mainly for personal purposes, even in a work-from-home setting, generally does not qualify as a business asset.

The 180-day rule also affects the deduction. If the refrigerator is first used for fewer than 180 days during the financial year, only 50% of the normal depreciation rate can be claimed for that year. 

For a refrigerator eligible for 15% depreciation, the allowable deduction becomes 7.5% in the first year. The remaining value stays within the block of assets and continues to depreciate in future years at the applicable rate.

How to apply the fridge depreciation rate?

A refrigerator used for business is added to the relevant plant and machinery block, and depreciation is calculated on the block’s written-down value (WDV), not on the fridge as a separate asset.

A pharmacy buys a medicine storage refrigerator for ₹90,000 on 15 May. Since the refrigerator was used for more than 180 days before 31 March, the full depreciation rate applies.

The plant and machinery block’s opening WDV is ₹4,00,000 as of 1 April.

• Add the cost of the new asset: ₹4,00,000 + ₹90,000 = ₹4,90,000
• Apply depreciation at 15%: 15% × ₹4,90,000 = ₹73,500
• Closing WDV: ₹4,90,000 − ₹73,500 = ₹4,16,500

The closing WDV of ₹4,16,500 becomes the opening WDV for the next financial year.

Note: Once the fridge is added to the block, it loses its separate identity for tax purposes. If the same fridge is sold in a later year for ₹40,000, that sale value is deducted from the block’s WDV, which reduces the base on which future depreciation is calculated.

Does the type of refrigerator change the depreciation rate?

Yes. A refrigerator’s depreciation rate depends on how the equipment is classified under the ITA, which is determined by its operating characteristics rather than its size or price.

• Standard electric refrigerator: Falls under general plant and machinery and is generally eligible for 15% depreciation under the WDV method. This typically applies to refrigerators used in offices, pharmacies, restaurants and retail setups.
• Solar-powered refrigeration unit: May qualify as an energy-saving device and be eligible for 40% depreciation under the WDV method. For example, a solar-powered pharma storage unit in a rural distribution centre may fall within this category rather than the general plant and machinery block. The unit must be primarily solar-operated to qualify.
• Cold storage systems: A standalone cold storage unit within business premises is generally eligible for 15% depreciation under the WDV method. Large-scale cold chain infrastructure may fall under specific industrial machinery provisions and should be verified professionally.

What is the refrigerator depreciation rate under the Companies Act, 2013

The Companies Act operates differently. Schedule II assigns a useful life to each asset class rather than prescribing preset percentage rates. After that, the company keeps a residual value of no more than 5% of the initial cost and spreads the asset's cost across its lifetime.

A refrigerator utilised in a commercial setting falls under Schedule II's plant and machinery category and has a 15-year prescribed useful life. If a company has a technical explanation and reports the difference in its financial statements, it may take on a different existence. 

When does a fridge not qualify for depreciation?

A fridge qualifies for depreciation only when it is owned, used for business purposes and put to use during the financial year. If any of these conditions are not met, the claim will usually fail.

• Personal use: A fridge kept in a proprietor’s home, even if that address is the registered office, generally will not qualify unless the area is used exclusively for business and the fridge has a clear commercial purpose.
• Not put to use: If the fridge is purchased but remains in storage, unopened or is not actually used during the financial year, depreciation cannot be claimed for that year.
• No ownership under a finance lease: Although accounting standards such as Ind AS 116 allow a lessee to recognise a Right-of-Use (RoU) asset, income tax law generally follows legal ownership. In most cases, the lessor claims depreciation, while the lessee deducts lease payments as business expenses.
• Nil or negative block: If sale proceeds from assets in the block exceed the block’s written down value (WDV), no depreciation is allowed. The excess is generally taxable as short-term capital gain.
• Fully depreciated but still in use: Once the block’s WDV becomes nil, or, under company accounts, the asset’s useful life is fully exhausted, no further depreciation can be claimed, even if the fridge continues to operate.

Conclusion

Correctly claiming depreciation on a business fridge comes down to three things: proper classification, actual business use and accurate tracking within the relevant asset block. The biggest practical challenge is not the rate itself but maintaining the written-down value correctly over time as assets are added, sold or affected by the 180-day rule.

That is where reliable accounting systems matter. TallyPrime helps businesses keep depreciation accurate year after year by recording each asset’s purchase date, placing it in the correct block and automatically updating the written-down value. This keeps the depreciation claimed on your tax return aligned with your books and strengthens long-term compliance.