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6.3. Depreciation and Amortization

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:

Aircraft 33.33%
Boats 10%
Building (housing machinery) 5%
Building used for providing services and warehousing (effective1 January 2019) 2%
Furniture and fitting 10%
Motor vehicle 20%
Plant and machinery 20%
Office equipment, including computers and other electronic items 50%
Others 15%

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.

Accelerated Depreciation

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.