The depreciation rate on furniture in India is 10% per annum under the Income Tax Act, calculated using the Written-Down Value (WDV) method. This allows businesses to claim a deduction each year for the decline in value of furniture used in operations.
For businesses that own office desks, chairs or fixtures, applying the correct depreciation rate on furniture helps reduce taxable income, maintain accurate financial records and ensure compliance.
Depreciation rate on furniture
As per the Income Tax Rules (FY 2025–26), the depreciation rate on furniture and fittings is 10% per annum. This applies to furniture used for business or professional purposes.
- Wooden or temporary structures may be depreciated at 40%
- The rate applies to furniture and fittings, including electrical fittings
- Depreciation is calculated using the WDV method
Using the correct depreciation rate on furniture ensures proper tax deduction and reporting.
Written-Down Value method
Under the Income Tax Act, depreciation on furniture is calculated using the WDV method, where depreciation is applied to the reduced value of the asset each year.
Formula:
Depreciation = Opening WDV × Depreciation Rate
Example:
Cost of furniture: ₹1,00,000
Depreciation rate on furniture: 10%
Year 1
Depreciation = ₹1,00,000 × 10% = ₹10,000
Closing WDV = ₹90,000
Year 2
Depreciation = ₹90,000 × 10% = ₹9,000
Closing WDV = ₹81,000
This method gradually reduces asset value and spreads the tax benefit over time.
Block of assets concept
The block of assets concept forms the basis for applying the depreciation rate on furniture under tax rules.
- Furniture and fittings with the same depreciation rate are grouped into one block
- Depreciation is calculated on the total block value, not individual items
- Individual asset tracking is not required once added to the block
This simplifies accounting and ensures consistent application of the depreciation rate on furniture.
Conditions to claim depreciation on furniture
Practical example for businesses
Consider a business purchasing furniture worth ₹5,00,000.
Case 1: Full-year use
Depreciation = ₹5,00,000 × 10% = ₹50,000
Case 2: Used for less than 180 days
Depreciation = ₹5,00,000 × 5% = ₹25,000
Impact:
- Higher depreciation reduces taxable income
- Improves short-term cash flow
Conclusion
Applying the correct depreciation rate on furniture helps businesses ensure accurate tax computation, compliance and better financial control. Using the WDV method along with the block of assets concept simplifies calculation and reporting.
With TallyPrime, businesses can track asset values and maintain accurate financial records for reporting and compliance.
