Can I Claim Depreciation on Business Assets as a Business Expense in India?
Yes — depreciation on tangible and intangible business assets is deductible under Section 32 of the Income Tax Act at prescribed rates using the Written-Down Value (WDV) method. The key rates are: computers/software 40%, general plant and machinery 15%, furniture 10%, vehicles 15-30%, buildings 5-10%. Assets bought after 3 October in the financial year get only 50% of the rate for that year.
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What Income Tax Department (CBDT) says
Section 32 IT Act 1961 read with Rule 5 and Appendix I of Income Tax Rules. WDV block-of-assets system: all assets of the same rate class form one block. Additional depreciation at 20% in the first year for new plant and machinery used in manufacturing (Section 32(1)(iia)). Companies under Section 115BAA can claim full depreciation.
When you can claim
- Computers, laptops, and IT peripherals (40% WDV)
- Accounting and business software licences (40% WDV)
- Office furniture (10% WDV)
- General plant and machinery (15% WDV)
- Company-owned cars and two-wheelers (15% or 30% WDV)
- Factory and manufacturing equipment with additional 20% first-year depreciation
When you cannot claim
- Assets not used for business purposes (personal assets of directors)
- Goodwill (from AY 2021-22, goodwill is no longer depreciable under IT Act)
- Land (never depreciable)
Good to know
Pro tip: Claim additional depreciation (20% extra in year 1) on new manufacturing plant and machinery — this is a significant first-year benefit. For computers and software, the 40% rate means the asset is largely written off in 3 years. Note that goodwill was removed from eligible assets in AY 2021-22; companies that paid goodwill on acquisition can no longer depreciate it for tax purposes — review your asset register.
Related expenses
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