How is depreciation calculated under the Companies Act 2013?

Under Schedule II, depreciation is based on the useful life of each asset rather than fixed rates. You can use the Straight-Line Method (SLM) or Written-Down-Value (WDV) method, with a residual value usually taken as 5% of cost.

What is the difference between Companies Act and Income-Tax depreciation?

Companies Act (Schedule II) depreciation is useful-life based and used in the books/financial statements. Income-Tax depreciation uses fixed block rates on the WDV method with a 180-day half-year rule, and is used only for computing taxable income. The two differ and create a deferred-tax timing difference.

What is the residual value under Schedule II?

Residual (scrap) value is generally taken as 5% of the original cost of the asset, unless a different justified estimate is used.

Blog › Accounting

Depreciation as per the Companies Act 2013 (Schedule II)

Updated 8 June 2026 · 6 min read · By KyaTax

Since the Companies Act, 2013, depreciation in a company's books is no longer based on fixed rates — it is based on the useful life of each asset under Schedule II. This guide explains the useful lives, the two methods, residual value, and how Companies Act depreciation differs from Income-Tax depreciation.

Useful-life approach

Schedule II prescribes the useful life (in years) for each class of asset. Depreciation is then charged so that the asset's cost (less residual value) is written off over that life. Common useful lives:

Asset class	Useful life (years)
Building (RCC)	60
Building (other)	30
Plant & Machinery (general)	15
Furniture & Fixtures	10
Office Equipment	5
Computers & Laptops	3
Servers & Networks	6
Motor Vehicles	8

SLM vs WDV

You can compute depreciation using either method:

Straight-Line Method (SLM): equal depreciation each year = (Cost − Residual) ÷ Useful life.
Written-Down-Value (WDV): a fixed percentage applied each year on the reducing balance; the rate is derived from the useful life and residual value.

Residual value

Residual (scrap) value is generally taken as 5% of the original cost. Depreciation is charged on cost less residual value (SLM) or until the WDV reaches the residual value.

Pro-rata for additions

For assets bought during the year, depreciation is charged pro-rata from the date the asset is ready for use — not the whole year.

📉 Calculate it instantly

Enter your assets and get a Fixed Assets Register with depreciation under Companies Act Schedule II and Income-Tax Act — both ways, with charts.

Try the Depreciation Tool free →

Companies Act vs Income-Tax depreciation

These are two different systems and almost always give different numbers:

	Companies Act (Sch II)	Income-Tax Act
Basis	Useful life	Fixed block rates
Method	SLM or WDV	WDV (blocks)
Part-year	Pro-rata by days	180-day half-year rule
Used for	Books / financial statements	Taxable income

💡 The difference between the two depreciation amounts is a timing difference that drives deferred tax (Ind AS 12 / AS 22). Our Ind AS helper computes it.

Frequently asked questions

Are Schedule II lives mandatory?

The prescribed lives are indicative; a company may use a different useful life if justified and disclosed.

Which method should I choose — SLM or WDV?

Either is allowed; WDV front-loads depreciation (higher in early years), SLM spreads it evenly. Apply consistently.

Need full Virtual CFO support?

Fixed-asset registers, financial statements, Ind AS & MIS — handled end-to-end.

Explore Virtual CFO →