Income Tax Depreciation Rate on Fittings 2025-26

Depreciation is used to calculate how any assets lose their value over time due to usage. This is a process that helps businesses and individuals to lower their taxable income. Under the Income Tax Act, different assets have a set depreciation rate for each year and that helps in deciding how much value can be written off for the year. For example, if an asset has a depreciation rate of 10%, that amount can be claimed as a deduction for its reduced value.

Depreciation means the value of an asset slowly goes down over time because of use, damage, or becoming outdated. It is an accounting method that anyone can use to allocate the cost of a tangible asset for how long it is in use. The Income Tax Act provides a depreciation allowance for certain assets that is based on the Written Down Value (WDV) or Straight-Line Method (SLM), which totally depends on the nature of the asset and the business sector.

Depreciation helps in reducing the taxable income of a business by lowering the profit on which tax is calculated. Each asset class has a prescribed depreciation rate that is allowed under the Income Tax Act. The rate is determined based on the type of asset, how long it is expected to be used, and its function in the business. For example, the depreciation rate for Fittings is set at 10%, it means that the business can deduct 10% of the Written Down Value of the asset.

There are two primary methods used to calculate depreciation for tax purposes:

Written Down Value (WDV) Method

Under this method, the depreciation is calculated on the remaining book value of the asset at the beginning of each financial year. This means that the asset will be depreciated each year by a percentage of its WDV. For instance, if the depreciation rate for Fittings is 10%, the depreciation amount for the first year would be based on the original cost of the asset, and subsequent years would be based on the WDV after subtracting the depreciation from the previous year.

Straight-Line Method (SLM)

Under this method, the depreciation is spread evenly over the asset's useful life. The depreciation expense remains the same each year. This method is commonly used for assets that lose their value evenly over time, such as buildings or furniture.

The depreciation rate assigned to an asset can vary based on the type of asset and its use in the business. Here are the depreciation rates as prescribed by the Income Tax Act for different asset classes:

Under the Income Tax Act, assets are grouped into different classes called blocks of assets. Each block of assets is assigned a specific depreciation rate, which applies to all assets within that block. For example, the block for Fittings may have a depreciation rate of 10%, meaning all assets falling under this category are eligible for depreciation at this rate.

Depreciation plays a crucial role in tax planning and asset management. The depreciation rate for Fittings is determined based on the asset class, its expected useful life, and its role in the business. The Income Tax Act allows any business to claim the depreciation as a deduction, which reduces their taxable income and consequently, their tax liability.

If you are using the WDV method or the SLM method, businesses should carefully determine the depreciation rate for each of their assets to ensure compliance with tax laws and optimize their tax position.