Cabsa | Depreciation Rates - Companies Act, 2013 (Schedule II)

Key Principles of Depreciation (Schedule II)

Unlike the Income Tax Act, the Companies Act, 2013 (in Schedule II) specifies the **useful life** of an asset, not a fixed depreciation rate. Companies must calculate depreciation based on this useful life using a method like **Straight Line Method (SLM)** or **Written Down Value (WDV)**.

Note: Companies can use a different useful life if a different rate is justified and a technical report is available. However, such a change must be disclosed in the financial statements.

I. Buildings [NESD*]

Nature of Assets	Useful Life
Buildings (other than factory) - RCC Frame Structure	60 Years
Buildings (other than factory) - other than RCC Frame Structure	30 Years
Factory Buildings	30 Years
Fences, Wells, Tube wells	5 Years
Temporary Structures (e.g., wooden structures)	3 Years

II. Roads & Bridges [NESD*]

Nature of Assets	Useful Life
Bridges, Culverts, Bunders, etc.	30 Years
Carpeted Roads - RCC	10 Years
Carpeted Roads - other than RCC	5 Years
Non-Carpeted Roads	3 Years

III. Plant and Machinery

Nature of Assets	Useful Life
General Plant & Machinery (not for specific industries)	15 Years
Continuous Process Plant [NESD*]	25 Years
Specialised Plant (e.g., for motion picture films, glass manufacturing)	Varies (10 to 13 Years)
Computers and Data Processing Units (including software)	3 Years

IV. Furniture and Fittings

Nature of Assets	Useful Life
General Furniture and Fittings	10 Years

V. Vehicles

Nature of Assets	Useful Life
Motor cycles, scooters, etc.	10 Years
Motor cars, buses, lorries (used for business of running on hire)	6 Years
Motor cars, buses, lorries (not used for business of running on hire)	8 Years

Important Notes & Provisions (Companies Act, 2013)

*NESD: Stands for "No Extra Shift Depreciation." Extra depreciation is not allowed for these assets even if they are used in double or triple shifts.
Residual Value: The residual value of an asset should generally not be more than 5% of its original cost.
Pro-rata Depreciation: If an asset is added or disposed of during a financial year, depreciation is calculated on a pro-rata basis from the date of addition or up to the date of disposal.
Double Shift / Triple Shift: If an asset (not marked with NESD) is used for double shift, the depreciation will be increased by 50%. For a triple shift, the depreciation will be increased by 100%.
Component Depreciation: If a significant part of an asset has a useful life different from the useful life of the remaining asset, the depreciation for that part should be determined separately.