Depreciation Calculation - Comprehensive Block of Assets Example
# Depreciation Calculation on Block of Assets
## Core Rule Recap
Depreciation under the Income Tax Act is computed on the Written Down Value (WDV) of the block of assets, not on each individual asset. The rate of depreciation depends on the type of asset:
Plant & Machinery (general): 15%
Computers & Computer Software: 40%
## The Half-Rate Rule
If an asset is purchased AND put to use during the previous year for less than 180 days (i.e., put to use on or after 4th October), depreciation is allowed at 50% of the normal rate.
When computing depreciation, split the block into three layers:
1. Purchased but NOT put to use during P.Y. → No depreciation
2. Put to use ON or AFTER 4th October → Half rate (e.g., 7.5% for 15% block; 20% for 40% block)
3. Balance WDV (old assets + new assets put to use before 4th October) → Full rate
## Key Takeaways
Sale price is deducted from the block, not treated as gain individually (unless block becomes negative or empty).
An asset must be both purchased AND put to use to be eligible for depreciation; mere purchase is insufficient.
The cut-off date is 3rd October vs 4th October — assets put to use on/before 3rd Oct get full rate; from 4th Oct onwards get half rate.
Worked example
### Example 1
Comprehensive Example — Block of P&M (15%) and Computers (40%)
Given:
Particulars
Amount (₹)
Opening WDV of P&M (15%) on 1.4.25
5,00,000
Opening WDV of Computer (40%) on 1.4.25
1,00,000
Purchase & put to use Car on 31.7.25
2,00,000
Purchase Computer on 10.10.25
50,000
Purchase & put to use P&M on 1.11.25
3,00,000
Purchase P&M on 10.12.25 (not put to use upto 31.3.26)
1,00,000
Sale of 1 P&M (15%) on 25.12.25
4,00,000
Solution — Block of P&M (15%):
Particulars
Amount (₹)
Opening WDV
5,00,000
(+) Car put to use on 31.7.25 (before 3rd Oct)
2,00,000
(+) P&M put to use on 1.11.25 (after 3rd Oct)
3,00,000
(+) P&M purchased but not put to use
1,00,000
(-) Sale of P&M
(4,00,000)
WDV of Block for Depreciation
7,00,000
Depreciation breakdown:
Not put to use (1,00,000) → No depreciation
Put to use after 3rd Oct (3,00,000 × 7.5%) = 22,500
Balance WDV (3,00,000 × 15%) = 45,000
Total Depreciation = 67,500
Closing WDV = 7,00,000 − 67,500 = ₹ 6,32,500
Solution — Block of Computers (40%):
Particulars
Amount (₹)
Opening WDV
1,00,000
(+) Computer purchased 10.10.25 (after 3rd Oct)
50,000
WDV of Block for Depreciation
1,50,000
Depreciation breakdown:
After 3rd Oct (50,000 × 20%) = 10,000
Balance WDV (1,00,000 × 40%) = 40,000
Total Depreciation = 50,000
Closing WDV = 1,50,000 − 50,000 = ₹ 1,00,000
⚠️ Common exam mistakes
Charging depreciation on an asset that was purchased but not put to use during the P.Y. — depreciation requires BOTH purchase and put-to-use.
Applying half rate to opening WDV / old assets — half rate applies ONLY to newly acquired assets put to use after 3rd October.
Treating the sale of one asset out of a block as a capital gain when the block continues to exist with positive WDV — the sale value simply reduces the block.
Confusing the cut-off: assets put to use ON 3rd October get FULL rate; only assets put to use ON OR AFTER 4th October get half rate.
Forgetting to apply 40% rate to computers — students often default to 15%.
Bare-Act text Section 32(1) · Income Tax Act, 1961 · click to expand
Section 32(1) — In respect of depreciation of buildings, machinery, plant or furniture, being tangible assets... owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed... Provided that where an asset... is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction... shall be restricted to fifty per cent of the amount calculated at the percentage prescribed.