Depreciation Calculator (SLM & WDV)

Depreciation is the systematic reduction in the recorded value of a fixed asset (like machinery, vehicles, buildings) over its useful life. Under the Companies Act and Income Tax Act, businesses must calculate and record depreciation for financial reporting and tax purposes. In India, the income tax department specifies depreciation rates for different asset categories: plant and machinery (15%), buildings (5%), vehicles (15-20%), computers (40%). A business buying equipment for ₹10 lakh depreciates it annually; if useful life is 10 years with no salvage value, annual depreciation is ₹1 lakh, reducing asset value and creating a tax deduction. Depreciation is a non-cash expense—the actual cash was spent when buying the asset, but the expense is spread over multiple years per accounting standards. For GST purposes, capital purchases are subject to 5-18% GST which can be claimed as input credit. For income tax, depreciation reduces taxable income. Understanding depreciation helps: correctly report financial position, claim maximum tax deductions, and make asset purchase/lease decisions.