Depreciation Calculator
Straight line, WDV and double declining
Depreciation schedule
| Year | Opening value | Depreciation | Accumulated | Closing value |
|---|---|---|---|---|
| 1 | ₹10,00,000 | ₹95,000 | ₹95,000 | ₹9,05,000 |
| 2 | ₹9,05,000 | ₹95,000 | ₹1,90,000 | ₹8,10,000 |
| 3 | ₹8,10,000 | ₹95,000 | ₹2,85,000 | ₹7,15,000 |
| 4 | ₹7,15,000 | ₹95,000 | ₹3,80,000 | ₹6,20,000 |
| 5 | ₹6,20,000 | ₹95,000 | ₹4,75,000 | ₹5,25,000 |
| 6 | ₹5,25,000 | ₹95,000 | ₹5,70,000 | ₹4,30,000 |
| 7 | ₹4,30,000 | ₹95,000 | ₹6,65,000 | ₹3,35,000 |
| 8 | ₹3,35,000 | ₹95,000 | ₹7,60,000 | ₹2,40,000 |
| 9 | ₹2,40,000 | ₹95,000 | ₹8,55,000 | ₹1,45,000 |
| 10 | ₹1,45,000 | ₹95,000 | ₹9,50,000 | ₹50,000 |
Straight line (SLM). Depreciation never takes the book value below the salvage value.
Understand the result
About the Depreciation Calculator
What is depreciation?
Depreciation spreads the cost of an asset — machinery, a vehicle, computers, furniture — over the years it is used, rather than treating the whole cost as an expense in the year of purchase. It reflects wear and tear and obsolescence, and it reduces taxable profit.
This depreciation calculator shows the yearly depreciation and book value under the straight-line (SLM), written-down-value (WDV) and double-declining-balance methods, with a full schedule.
How this calculator works
Depreciation spreads the cost of a long-lived asset across the years that actually benefit from it, instead of charging the whole amount in the year of purchase. It is an accounting allocation, not a cash outflow — the money left when you bought the asset.
Straight line divides the depreciable amount evenly across the useful life. It is simple, predictable, and what the Companies Act expects for most financial reporting. Every year carries the same charge.
Written-down value applies a fixed percentage to the shrinking book value, so the charge is heavy early and light later. This is what the Income Tax Act prescribes for most Indian assets, which are grouped into blocks with statutory rates — 15% for plant and machinery, 40% for computers.
Double declining is WDV at twice the straight-line rate. It front-loads the charge even more aggressively, which suits assets that genuinely lose most of their value in the first years — vehicles and IT equipment being the obvious examples.
This is why companies commonly keep two sets of depreciation figures: straight line for the books under the Companies Act, and WDV for the tax computation under the Income Tax Act. The difference creates deferred tax.
Formula
Straight line (SLM) Annual charge = (cost − salvage) ÷ useful life Written down value (WDV) Annual charge = opening book value × rate Double declining rate = 2 ÷ useful life Annual charge = opening book value × rate In every method the book value never falls below salvage.
Worked example
- Machine costing ₹10,00,000, salvage ₹50,000, useful life 10 years.
- Straight line: (10,00,000 − 50,000) ÷ 10 = ₹95,000 every year.
- WDV at 15%: ₹1,50,000 in year one, ₹1,27,500 in year two, falling each year thereafter.
SLM vs WDV in the first five years
| Year | Straight-line | Written-down value |
|---|---|---|
| 1 | ₹95,000 | ₹1,50,000 |
| 2 | ₹95,000 | ₹1,27,500 |
| 3 | ₹95,000 | ₹1,08,375 |
| 4 | ₹95,000 | ₹92,119 |
| 5 | ₹95,000 | ₹78,301 |
WDV front-loads depreciation, matching assets that lose value fastest when new; SLM spreads it evenly.
Income-tax vs company-law depreciation
- For income tax, assets are grouped into blocks and depreciated on the WDV method at prescribed rates — for example 15% for general plant and machinery, 40% for computers, 10% for furniture and 5% or 10% for buildings.
- Only half the rate is allowed in the year of purchase if the asset is used for less than 180 days.
- Companies’ books follow Schedule II of the Companies Act, which prescribes useful lives, with either SLM or WDV allowed.
- Because the two sets of rules differ, a company’s book profit and taxable profit usually differ too.
Assumptions & important notes
What this calculator assumes
- Depreciation runs for a full year from year one. In practice the Companies Act requires pro-rata charging from the date the asset is put to use.
- Useful life and salvage value are estimates fixed at the outset. Both can be revised, and a revision changes the charge prospectively.
- No additions, disposals or impairment during the life of the asset.
- The Income Tax Act works on blocks of assets rather than individual items, and applies half the rate if an asset is used for under 180 days in the year of purchase.
Important notes
- Schedule II useful lives under the Companies Act: buildings 30–60 years, plant and machinery 15 years, furniture 10 years, vehicles 8–10 years, computers 3 years.
- Income Tax block rates: 10% buildings, 15% plant and machinery, 40% computers and software, 30% certain vehicles.
- Additional depreciation of 20% is available on new plant and machinery acquired by a manufacturing business, in the year of purchase.
- Land is never depreciated. It has no finite useful life.
- The Companies Act permits a residual value of no more than 5% of original cost unless justified.
Frequently asked questions
Which method should I use?
Straight line for financial statements under the Companies Act, and written-down value for the income tax computation, because that is what each statute expects. Most Indian companies maintain both.
Why does WDV never reach zero?
Because each year takes a percentage of what remains, and a percentage of a positive number is always positive. Under the Income Tax Act the residue stays in the block until every asset in it is sold.
Is depreciation a cash expense?
No. The cash left when you paid for the asset. Depreciation reduces accounting profit and therefore tax, but no money moves — which is why it is added back when calculating cash flow.
What is the difference between depreciation and amortisation?
They are the same allocation applied to different things: depreciation for tangible assets like machinery and buildings, amortisation for intangibles like patents, goodwill and software licences.
Can land be depreciated?
No. Land does not wear out, so it is not depreciated. Buildings on it are.
PaiseWise runs entirely in your browser — the figures you enter are never sent anywhere. Results are estimates for planning only, not financial, tax or investment advice.