Fixed assets (except buildings with machinery) are depreciated using either straight-line method or declining balance method.
Following are the prescribed depreciation rates for different categories of assets:
|Building (housing machinery)||5%|
|Building used for providing services and warehousing (effective1 January 2019)||2%|
|Furniture and fitting||10%|
|Plant and machinery||20%|
|Office equipment, including computers and other electronic items||50%|
Buildings that are used for housing machinery and buildings that are used for providing services and warehousing are depreciated using the straight-line method.
Effective from 1 January 2019, capital expenditure incurred in relation to new equipment for industries harnessing alternate energy through wind, solar, water and biomass technologies can be written off within 2 years.
Depreciation is normally claimed on the cost of the asset. However, depreciation claimed on assets which are written off by application of the straight-line method is restricted to 90% of the cost of the relevant asset.
Further, petroleum and mining sectors and diamond and gold mining sectors are allowed to depreciate their capital assets at the rate of 20% every year on straight-line method.
In addition to the above, accelerated depreciation is granted to pioneer industries and few other business undertakings. An initial allowance of 40% of the cost of the asset on plant and machinery and 10% of the cost of the asset on industrial buildings and structures is granted as accelerated depreciation for the year of purchase of the asset.