# Depreciation under Section 32 — Conditions, Assets & Rates
Depreciation is allowed as a deduction under Section 32 when computing PGBP. The provisions follow the Block of Assets concept, with specific rates and conditions.
## (1) Conditions to Claim Depreciation
Both conditions must be satisfied:
1. The asset must be used for the purpose of business or profession — usage can be active or passive (kept ready for use).
2. The assessee must be the owner of the asset, wholly or partly.
### Important Sub-Rules
| Rule | Detail |
|---|---|
| Put-to-use requirement | Depreciation is generally allowed only when asset is put to use during the PY. |
| Standby equipment | For standby equipment, fire extinguishers, and machinery spares — depreciation is allowed even if kept ready for use (not actively used). |
| Leased assets | The lessor (legal owner) is entitled to depreciation, NOT the lessee. |
| Land & Goodwill | No depreciation is allowed on land or goodwill of a business or profession. |
| Mandatory | Claiming depreciation is mandatory, not optional — even if assessee doesn't claim it, the WDV is reduced. |
## (2) Categories of Depreciable Assets
```
Depreciable Assets
├── Tangible
│ ├── Building
│ ├── Furniture
│ └── Plant & Machinery
└── Intangible
└── Know-how, Patent, Copyright, Trademark, Licenses,
Franchises or any other business/commercial right
of similar nature (EXCEPT Goodwill)
```
## (3) Depreciation Rates (For Quick Recall)
### Buildings
| Block | Description | Rate |
|---|---|---|
| Block 1 | Residential building | 5% |
| Block 2 | Commercial building | 10% |
| Block 3 | Temporary structures (e.g., wooden sheds) | 40% |
### Furniture
| Block | Description | Rate |
|---|---|---|
| Block 1 | All furniture & fittings | 10% |
### Plant & Machinery
| Block | Description | Rate |
|---|---|---|
| Block 1 | Aeroplanes, Pollution Control Equipment, Medical Equipment, Windmills, Energy-Saving Devices, Books & Annual Publications, Computers (including computer software & accessories) | 40% |
| Block 2 | Ships | 20% |
| Block 3 | Motor cars (taxis, buses) used in the business of running on hire | 30% |
| Block 4 | Other motor cars, oil wells, office equipment/appliances, EPABX & mobile phones, all other plant & machinery | 15% |
### Intangible Assets
| Block | Description | Rate |
|---|---|---|
| Block 1 | All intangible assets (except goodwill — no depreciation on goodwill) | 25% |
## Memory Hooks
- 5% Residential, 10% Commercial, 40% Temporary → buildings.
- 40% rate is the 'high-tech / specialised' bucket — computers, aircraft, medical, energy saving, pollution control, books.
- Motor cars for hire = 30%; other motor cars = 15%.
- All intangibles → 25% (one block).