Depreciation Methods under Companies explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Depreciation is charged differently under the Companies Act and the Income-tax Act. Here is how the two methods differ.
Under the Companies Act
- Based on the useful life of the asset (Schedule II)
- Can use straight-line (SLM) or written-down value (WDV)
- Computed asset-wise for the financial statements
Under the Income-tax Act
- Based on prescribed block-of-assets rates
- Uses the WDV method on blocks of assets
- Additional depreciation available for certain new plant & machinery
Why they differ
The difference between book and tax depreciation creates deferred tax, reconciled in the accounts.
Frequently Asked Questions
How is depreciation charged under the Companies Act?
Based on the useful life of assets (Schedule II), using SLM or WDV.
How is depreciation charged under income tax?
On blocks of assets at prescribed rates using the WDV method.
Why do book and tax depreciation differ?
Different bases (useful life vs block rates), which creates deferred tax.
What is additional depreciation?
Extra depreciation on certain new plant & machinery under income tax.
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Talk to an expert →Key Facts About Depreciation Methods under Companies
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
How is depreciation charged under the Companies Act?
Based on the useful life of assets (Schedule II), using SLM or WDV.
How is depreciation charged under income tax?
On blocks of assets at prescribed rates using the WDV method.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Depreciation Methods under Companies: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.
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Why This Matters
Staying compliant with Indian regulations protects your business from penalties, interest and unnecessary legal trouble. It is always wise to maintain proper records and documentation so that any future scrutiny can be handled smoothly. Rules and thresholds in accounting standards bookkeeping are revised periodically, so it helps to review your obligations at the start of each financial year. Professional guidance from a qualified CA, CS or advocate ensures that filings are accurate and submitted well before the due date.
Small businesses and startups especially benefit from setting up a simple compliance calendar to track recurring deadlines. Government portals now allow most applications and filings to be completed online, reducing paperwork and turnaround time. Keeping your PAN, registration certificates and board resolutions organised makes every subsequent filing faster. When in doubt, it is better to seek clarification early rather than risk a notice or a late-filing penalty later.
A clear understanding of the applicable law helps you make confident, well-informed business decisions. TaxClue's experts regularly assist businesses across India with end-to-end accounting standards bookkeeping support at transparent, affordable pricing. Timely compliance also improves your credibility with banks, investors and government authorities. Reviewing your obligations with a professional at least once a year keeps your business audit-ready and stress-free.
Staying compliant with Indian regulations protects your business from penalties, interest and unnecessary legal trouble. It is always wise to maintain proper records and documentation so that any future scrutiny can be handled smoothly. Rules and thresholds in accounting standards bookkeeping are revised periodically, so it helps to review your obligations at the start of each financial year. Professional guidance from a qualified CA, CS or advocate ensures that filings are accurate and submitted well before the due date.
Small businesses and startups especially benefit from setting up a simple compliance calendar to track recurring deadlines. Government portals now allow most applications and filings to be completed online, reducing paperwork and turnaround time. Keeping your PAN, registration certificates and board resolutions organised makes every subsequent filing faster.