What it means
A machine bought for ₹10 lakh earns money for years, so its cost is spread over those years. Two methods are common:
- Straight-line (SLM): the same amount each year.
- Written-down value (WDV): a fixed percentage of the remaining value, so more in early years.
Companies follow Schedule II of the Companies Act, which gives useful lives (15 years for most plant and machinery, 3 years for computers). Income tax has its own rates on blocks of assets, mostly WDV, with half the rate in the year of purchase if the asset is used for less than 180 days. Books and tax return therefore show different depreciation.
Example
Kaveri Agencies buys a packing machine for ₹10,00,000 on 1 Apr 2026, life 15 years, residual value 5%.
| Method | Year 1 | Year 2 |
|---|---|---|
| SLM in books: (10,00,000 − 50,000) ÷ 15 | ₹63,333 | ₹63,333 |
| WDV for income tax at 15% | ₹1,50,000 | ₹1,27,500 |
Common mistakes
- Charging income-tax rates in the company’s books.
- Not starting depreciation from the date the asset was put to use.
- Selling or scrapping an asset without removing it from the register.
In MyRecords
Each asset in the Assets module has its own depreciation schedule (straight line, written-down value, double declining balance, shift based or manual), and the entries post to the ledger. Income-tax depreciation works out each block at its WDV rate in a separate book that never touches your accounts, and the CA pack puts both in one Excel file. The Asset desk transfers, repairs, sells, scraps or restores an asset. Our free depreciation calculator compares methods before you buy.