Depreciation Rates Under the Income-tax Act, 2025: The Rate Chart, the 180-Day Rule, and the 35% That Doesn't Exist

Every March, somewhere in a CA firm, an article is typing a depreciation schedule. Opening WDV, additions, deletions, rate, depreciation, closing WDV. The same six columns, block after block, client after client.

From tax year 2026-27, that schedule is prepared under section 33 of the Income-tax Act, 2025, and the rates come from Appendix I to rule 25 of the Income-tax Rules, 2026. For the blocks most firms use, the percentages are the ones everyone already knows. The structure around them has a few things worth knowing, and one popular number that doesn't exist.

The rate chart

The rates are percentages of the written down value of each block, from Appendix I.

Buildings

• 5%: buildings used mainly for residential purposes, other than hotels and boarding houses
• 10%: other buildings
• 40%: purely temporary erections, such as wooden structures, and buildings for a water supply or treatment project

Furniture and fittings, including electrical fittings: 10%

Plant and machinery

• 15%: general plant and machinery, and motor cars other than those used in a hire business
• 30%: motor buses, lorries and taxis used in a business of running them on hire; moulds used in rubber and plastic goods factories; machinery for the semiconductor industry
• 40%: computers, including software; aircraft and aero-engines; air and water pollution control equipment; energy-saving and renewable-energy devices; life-saving medical equipment; books owned by professionals, and books of a lending library; gas cylinders

Also in Appendix I, and easy to miss

• 45%: motor buses, lorries and taxis used in a hire business, acquired on or after 23 August 2019 and before 1 April 2020, and put to use before 1 April 2020
• 30%: motor cars other than those used in a hire business, acquired and put to use in that same window
• 40%: new commercial vehicles acquired and put to use on or after 1 January 2009 and before 1 October 2009; containers of glass or plastic used as refills; machinery and plant in a water supply project or water treatment system; gas cylinders; and a long list of industry items, from match frames to rolling-mill rolls and sugar-works rollers

Ships: 20%

Intangible assets, meaning know-how, patents, copyrights, trademarks, licences, franchises and similar rights: 25%

Power undertakings follow a separate table, Appendix II, which charges depreciation on actual cost rather than on written down value. Rule 25 lets them opt for Appendix I instead.

The 180-day rule

Section 33(4) keeps the half-rate rule. An asset acquired during the year and put to use for less than 180 days in that year gets half the prescribed rate.

That is why the Form 26 depreciation schedule, under clause 36, splits every block's additions into those used for 180 days or more and those used for less. It does not ask for the date each asset was put to use, but the split depends on it. We wrote about that in what Form 26 needs during the year.

Additional depreciation, and the rate that isn't there

Under section 33(8) and 33(9), a business manufacturing or producing any article or thing, or generating, transmitting or distributing power, gets additional depreciation on new plant and machinery:

• 20% of actual cost in the year it is acquired and put to use;
• if it is used for less than 180 days in that year, 10% now and 10% in the next year.

It does not apply to ships, aircraft, second-hand machinery, anything installed in an office or residence, office appliances, road transport vehicles, or anything whose whole cost is deducted in another way.

Many summaries still quote a 35% rate for backward areas. The words "backward area" do not appear anywhere in the Income-tax Act, 2025.

Goodwill, and the other limits

• Goodwill is not depreciable. The Act says so in three places, including section 33(1)(b): intangible assets, "not being goodwill of a business or profession".
• The 40% cap. Under rule 25(2), a taxpayer in one of the concessional tax regimes cannot claim more than 40% on any block, even where Appendix I allows more.
• Unabsorbed depreciation carries forward under section 33(11) with no time limit, after the business losses brought forward are set off.
• Emptying a block. If the sale money is more than the block, or the block ceases to exist, the result is a capital gain under section 74, and a short-term one whatever the holding period.

Work out a block

Where this comes from

The provisions are sections 2(17), 33, 39, 41 and 74 of the Income-tax Act, 2025 as amended by the Finance Act, 2026, which made no change to them. The rates are Appendix I to rule 25 of the Income-tax Rules, 2026, as published in the Gazette of India, G.S.R. 198(E), 20 March 2026, checked against the rate columns in the Form 26 depreciation schedule. They apply from tax year 2026-27. Depreciation for 2025-26 is claimed under section 32 of the 1961 Act.