Professional utility for CAs and businesses to calculate asset depreciation as per Indian Income Tax Act rates.
| Year | Opening WDV | Depreciation | Closing WDV |
|---|---|---|---|
| Yr 1 | ₹10,00,000 | -₹1,50,000 | ₹8,50,000 |
| Yr 2 | ₹8,50,000 | -₹1,27,500 | ₹7,22,500 |
| Yr 3 | ₹7,22,500 | -₹1,08,375 | ₹6,14,125 |
| Yr 4 | ₹6,14,125 | -₹92,119 | ₹5,22,006 |
| Yr 5 | ₹5,22,006 | -₹78,301 | ₹4,43,705 |
The Written Down Value (WDV) method, also known as the reducing balance method, is the standard practice for tax reporting in India. Unlike the straight-line method, depreciation is calculated on the remaining value of the asset at the beginning of each year.
Every physical asset you buy—from a laptop to a delivery truck—loses value over time. In accounting, this loss is recorded as Depreciation. Understanding how to calculate it is crucial for accurate financial reporting, business valuation, and maximizing your tax deductions. Our Depreciation Calculator supports both the Straight Line and Written Down Value (WDV) methods used globally.
WDV = Book Value at start of year × Depreciation Rate.
The Straight Line Method is best for assets that provide uniform utility every year, like office furniture. However, most businesses prefer the Written Down Value (WDV) method for assets like machinery and vehicles. WDV allows for higher depreciation in the first few years (when the asset is most productive or loses market value fastest), which provides better tax benefits early on.
Under the Income Tax Act in India, depreciation is calculated using the Reducing Balance Method (WDV) on a 'Block of Assets' basis. Common rates include 15% for plant and machinery, 40% for computers and software, and 10% for residential buildings. Our tool helps you estimate these figures to plan your advance tax payments more effectively.
The Salvage Value is what you expect to get when you finally sell the asset for scrap or second-hand use. For many electronics, this is near zero, but for heavy machinery or vehicles, it can be 10-20% of the original cost. Correctly estimating this value is key to ensuring your book value matches the real-world value of your business at any given time.
Depreciation is unique because it is a 'Non-Cash' expense. It appears on your Profit and Loss Statement (reducing your net income) but doesn't involve any actual cash leaving your bank account. On the Balance Sheet, it reduces the 'Gross Block' of your assets to show the 'Net Block' or current book value. Mastering this helps business owners understand their true profitability.
Buying 10 Laptops for ₹5 Lakhs.
A delivery van worth ₹12 Lakhs.
Depreciation is the systematic reduction in the recorded cost of a fixed asset over its useful life.
It's the simplest method where the same amount of depreciation is deducted every year. Formula: (Cost - Salvage Value) / Useful Life.
Also known as the Reducing Balance method, it applies a fixed percentage to the remaining book value of the asset every year. This is the method used for Income Tax in India.
Salvage value (or residual value) is the estimated amount an asset will be worth at the end of its useful life.
Depreciation is a non-cash expense that reduces your taxable profit, thereby lowering your tax liability.
No. Land is generally considered to have an infinite useful life and its value typically appreciates over time.
It's the period over which the asset is expected to be productive. For example, computers usually have 3 years, while buildings have 30-60 years.
Cars in India typically use the WDV method at 15% for private use and 30% for commercial use (as per Income Tax rules).
An accelerated depreciation method that results in higher depreciation in the early years and lower in the later years.
The asset is fully depreciated. You can continue to use it, but you can no longer claim depreciation expenses for it.