Depreciation Calculator as per Companies Act
Build an SLM or WDV depreciation schedule using Schedule II useful lives, 5% residual value and pro-rata first-year depreciation.
A depreciation calculator as per Companies Act works out yearly depreciation using the useful lives in Schedule II of the Companies Act, 2013. It spreads cost minus a residual value of up to 5% over the asset’s life, using the straight-line (SLM) or written-down value (WDV) method.
This depreciation calculator as per Companies Act lets you pick an asset class, the method and the date you put the asset to use. It then builds a year-by-year schedule with opening value, depreciation and closing value, including pro-rata depreciation for the first year.
Key takeaways
- Schedule II gives useful lives, not fixed rates.
- Residual value is normally up to 5% of cost.
- SLM gives equal yearly depreciation; WDV gives more in early years.
- Depreciation is charged pro rata from the date of use.
How to Use the Depreciation Calculator
- Enter the costAdd the asset’s cost including installation.
- Pick the asset classThe Schedule II useful life fills in automatically.
- Choose the methodSelect SLM or WDV.
- Set the date put to useThe first year is worked out pro rata.
- Read the scheduleSee depreciation and closing value for each year.
Depreciation Formulas under Schedule II
WDV rate = 1 − (Residual value ÷ Cost)^(1 ÷ Useful life)
WDV depreciation = Opening value × WDV rate
First-year depreciation = Full-year depreciation × Days used ÷ 365
Useful Life of Assets as per Schedule II
| Asset | Useful life (years) |
|---|---|
| Factory building | 30 |
| Building with RCC frame (other than factory) | 60 |
| Plant and machinery (general) | 15 |
| Continuous process plant | 25 |
| Furniture and fittings | 10 |
| Office equipment | 5 |
| Computers: end-user devices | 3 |
| Computers: servers and networks | 6 |
| Electrical installations | 10 |
| Motor cars, buses and lorries (not for hire) | 8 |
| Vehicles in a hire business | 6 |
| Two-wheelers | 10 |
Read the full list in Schedule II on the Ministry of Corporate Affairs website.
Depreciation Rates by Useful Life
With a 5% residual value, Schedule II useful lives convert to these effective rates.
| Useful life (years) | SLM rate | WDV rate |
|---|---|---|
| 3 | 31.67% | 63.16% |
| 5 | 19.00% | 45.07% |
| 6 | 15.83% | 39.30% |
| 8 | 11.88% | 31.23% |
| 10 | 9.50% | 25.89% |
| 15 | 6.33% | 18.10% |
| 25 | 3.80% | 11.29% |
| 30 | 3.17% | 9.50% |
| 60 | 1.58% | 4.87% |
Depreciation calculation example
A company buys general plant and machinery for ₹10,00,000, with a 15-year life and 5% residual value. Under SLM, yearly depreciation is (10,00,000 − 50,000) ÷ 15 = ₹63,333, or 6.33%. In contrast, under WDV at 18.10%, Year 1 depreciation is ₹1,81,036 and Year 2 is ₹1,48,262. If the machine is put to use on 1 October 2026, the first-year SLM charge falls to ₹31,580 for 182 days.
Companies Act vs Income Tax Act Depreciation
| Point | Companies Act, 2013 | Income Tax Act, 1961 |
|---|---|---|
| Basis | Useful life of each asset | Block of assets |
| Methods | SLM or WDV | WDV only (most assets) |
| Plant and machinery | 15-year life | 15% WDV rate |
| Part-year use | Pro rata by days | Half rate if used under 180 days |
Consequently, most businesses keep two depreciation schedules: one for the books and one for tax. Confirm the treatment with your chartered accountant.
Related Tools
Depreciation flows into your profit and DSCR, so test it with the DSCR calculator. Furthermore, the project report maker includes depreciation in its five-year projections, and the break-even calculator treats it as a fixed cost. Read our project report guides for more.
Frequently Asked Questions
How is depreciation calculated as per the Companies Act?
Schedule II of the Companies Act, 2013 sets a useful life for each asset class. Depreciation spreads the cost minus residual value over that life, using the straight-line (SLM) or written-down value (WDV) method.
What is the residual value under Schedule II?
Residual value is normally not more than 5% of the original cost. A company can use a different value if it justifies it in its financial statements.
What is the useful life of plant and machinery?
General plant and machinery has a useful life of 15 years under Schedule II. Continuous process plant has 25 years.
How is depreciation calculated for part of a year?
Depreciation is charged pro rata from the date the asset is put to use. For example, an asset used from 1 October gets about half a year of depreciation in the first year.
What is the difference between Companies Act and Income Tax Act depreciation?
The Companies Act uses useful lives and SLM or WDV for accounts. The Income Tax Act uses block-wise WDV rates, such as 15% for general plant and machinery, with half the rate if the asset is used for less than 180 days.
How is the WDV rate worked out from useful life?
WDV rate = 1 − (Residual value ÷ Cost)^(1 ÷ Useful life). With 5% residual value and a 15-year life, the rate is 18.10%.
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