Depreciation as per Companies Act, 2013

Schedule II – Useful Lives to Compute Depreciation

PART A

The methodical distribution of an asset’s depreciable value over the course of its useful life is known as depreciation. The cost of an asset, or another quantity used in lieu of cost, less its remaining value is the amount that is depreciable. The amount of time an asset is anticipated to be suitable for use by its owner, or the quantity of production or comparable units that the entity anticipates obtaining from the item, is known as the asset’s useful life.
In this Schedule, amortization is included in the definition of depreciation.
Without affecting the aforementioned clauses in paragraph 1.

The asset’s useful life cannot exceed the duration indicated in Part “C,” and its residual value cannot exceed 5% of the asset’s initial cost. As long as a corporation utilises an asset’s usable life or residual value that differs from the limitations listed above, it must report the reason for the variation in its financial statement.
Except for intangible assets (Toll Roads) created under “Build, Operate and Transfer,” “Build, Own, Operate and Transfer,” or any other type of public-private partnership route in case of road construction, the provisions of the accounting standards currently in effect shall apply to intangible assets.

When this happens, amortisation can be carried out as follows

A.Mode of Amortisation

Amortisation amount

_________________

Cost of Intangible Assets (A)

B.Amortisation Amount = Actual Revenue for the year (B) _________________________________

Projected Revenue from Intangible Asset (till the end of the concession period) (C)

Meaning of specifics are as follows;

Cost of Intangible Assets (A) = Cost incurred by the company in compliance with the accounting standards.

Actual Revenue for the year (B) = Actual revenue(Toll charges) received during the year

Projected Revenue from Intangible Asset (C) = Total projected revenue from the Intangible Assets as provided to the project lender at the time of financial closure/agreement.

The entire cost of the intangible asset should be amortised during the concession term, according to the amortisation amount or rate.

Every financial year, the revenue is evaluated, and any changes in the estimations that would affect the actual revenue at the end of the concession period are taken into account when adjusting the predicted revenue.

PART B

Whatever the requirements of this Schedule, the depreciation to be provided for any particular asset will be determined by applying its useful life or residual value, as reported for accounting purposes by a Regulatory Authority established under an Act of Parliament or by the Central Government.

PART C

Subjects to Part A and B, Useful lives of various tangible assets are as follows.

Nature of Assets	Useful Life	Rate (SLM)	Rate (WDV)
I. Buildings
a. Buildings (other than factory buildings) RCC Frame Structure	60	1.58	4.87
b. Buildings (other than factory buildings) other than RCC Frame Structure	30	3.17	9.5
c. Factory buildings	30	3.17	9.5
d. Fences, wells, tube wells	5	19	45.07
e. Others (including temporary structure, etc.)	3	31.67	63.16

II. Bridges, culverts, bunders, etc. [NESD]	30	3.17	9.5

III. Roads [NESD]
a. Carpeted roads
i. Carpeted Roads – RCC	10	9.5	25.89
ii. Carpeted Roads – other than RCC	5	19	45.07
b. Non-carpeted roads	3	31.67	63.16

IV.Plant and Machinery
a. General rate applicable to plant and machinery not covered under special plant and machinery
1. Plant and Machinery other than continuous process plant not covered under specific industries	15	6.33	18.1
2. Continuous process plant for which no special rate has been prescribed under (b) below [NESD]	25	3.8	11.29

b. Special Plant and Machinery
1. Plant and Machinery related to production and exhibition of Motion Picture Films
i. Cinematograph films: studio lights other than bulbs, synchronizers, developing, printing, and editing machinery, recording and reproducing apparatus, and synchronisation equipment	13	7.31	20.58
ii. Projecting equipment for exhibition of films	13	7.31	20.58
2. Plant and Machinery used in glass manufacturing
i. Plant and Machinery except direct fire glass melting furnaces – Recuperative and regenerative glass melting furnaces	13	7.31	20.58
ii. Plant and Machinery except direct fire glass melting furnaces – Moulds [NESD]	8	11.88	31.23
iii. Float Glass Melting Furnaces [NESD]	10	9.5	25.89
3. Plant and Machinery used in quarries and mines, including earthmoving and portable subterranean machinery for open-pit mining [NESD]	8	11.88	31.23
4. Plant and Machinery used in Telecommunications [NESD]
i. Telecom transreceivers, switching centres, transmission and other network equipment	13	7.31	20.58
ii. Towers	18	5.28	15.33
iii. Telecom – Ducts, Cables and optical fibre	18	5.28	15.33
iv. Satellites	18	5.28	15.33
5. Plant and Machinery used in exploration, production and refining oil and gas [NESD]
i. Refineries	25	3.8	11.29
ii. Oil and gas assets (including wells), processing plant and facilities	25	3.8	11.29
iii. Petrochemical Plant	25	3.8	11.29
iv. Storage tanks and related equipment	25	3.8	11.29
v. Pipelines	30	3.17	9.5
vi. Drilling Rig	30	3.17	9.5
vii. Field operations (above ground) Portable boilers, drilling tools, well-head tanks, etc.	8	11.88	31.23
viii. Loggers	8	11.88	31.23
6. Plant and Machinery used in generation, transmission and distribution of power [NESD]
i. Thermal/Gas/Combined Cycle Power Generation Plant	40	2.38	7.22
ii. Hydro Power Generation Plant	40	2.38	7.22
iii. Nuclear Power Generation Plant	40	2.38	7.22
iv. Transmission lines, cables and other network assets	40	2.38	7.22
v. Wind Power Generation Plant	22	4.32	12.73
vi. Electric Distribution Plant	35	2.71	8.2
vii. Gas Storage and Distribution Plant	30	3.17	9.5
viii. Water Distribution Plant including pipelines	30	3.17	9.5
7. Plant and Machinery used in manufacture of steel
i. Sinter Plant	20	4.75	13.91
ii. Blast Furnace	20	4.75	13.91
iii. Coke ovens	20	4.75	13.91
iv. Rolling mill in steel plant	20	4.75	13.91
v. Basic oxygen Furnace Converter	25	3.8	11.29
8. Plant and Machinery used in manufacture of non-ferrous metals
i. Metal pot line [NESD]	40	2.38	7.22
ii. Bauxite crushing and grinding section [NESD]	40	2.38	7.22
iii. Digester section [NESD]	40	2.38	7.22
iv. Turbine [NESD]	40	2.38	7.22
v. Equipments for Calcination [NESD]	40	2.38	7.22
vi. Copper Smelter [NESD]	40	2.38	7.22
vii. Roll Grinder	40	2.38	7.22
viii. Rolling Mills	30	3.17	9.5
ix. Soaking Pit	30	3.17	9.5
x. Annealing Furnace	30	3.17	9.5
xi. Equipment for Scalping, Slitting, etc. [NESD]	30	3.17	9.5
xii. Surface Miner, Ripper Dozer, etc., used in mines	25	3.8	11.29
xiii. Copper refining plant [NESD]	25	3.8	11.29
9. Plant and Machinery used in medical and surgical operations [NESD]
i. Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories thereto, medical, diagnostic equipment, namely, Cat-Scan, ultrasound Machines, ECG Monitors, etc.	13	7.31	20.58
ii. Other Equipments	15	6.33	18.1
10. Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD]
i. Reactors	20	4.75	13.91
ii. Distillation Columns	20	4.75	13.91
iii. Drying equipments/ Centrifuges and Decanters	20	4.75	13.91
iv. Vessel/storage tanks	20	4.75	13.91
11. Plant and Machinery used in civil construction
i. Concreting, crushing, piling equipments and road making equipments	12	7.92	22.09
ii. Heavy Lift equipments –
Cranes with capacity of more than 100 tons	20	4.75	13.91
Cranes with capacity of less than 100 tons	15	6.33	18.1
iii. Transmission line, Tunnelling Equipments [NESD	10	9.5	25.89
iv. Earth-moving equipments	9	10.56	28.31
v. Others including Material Handling/ Pipeline/ Welding equipments	12	7.92	22.09
12. Plant and Machinery used in salt works [NESD]	15	6.33	18.1

V. Furniture and fittings [NESD]
1. General furniture and fittings	10	9.5	25.89
2. Furnishings and fittings found in lodging facilities, restaurants, boarding houses, libraries, welfare centres, meeting rooms, movie theatres, and circuses; additionally, furnishings and fittings rented out for events like weddings and similar functions.	8	11.88	31.23

VI. Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds	10	9.5	25.89
2. Motor cars, lorries, buses and taxis used in a business of running them on hire	6	15.83	39.3
3. Motor cars, lorries, buses other than those used in a business of running them on hire	8	11.88	31.23
4. Motor tractors, harvesting combines and heavy vehicles	8	11.88	31.23
5. Electrically operated vehicles including battery powered or fuel cell powered vehicles	8	11.88	31.23

VII. Ships [NESD]
1. Ocean – going ships
i. Bulk Carriers and liner vessels	25	3.8	11.29
ii. Crude tankers, product carriers and easy chemical carriers with or without conventional tank coatings	20	4.75	13.91
iii. Chemicals and Acid Carriers
a. With Stainless steel tanks	25	3.8	11.29
b. With other tanks	20	4.75	13.91
iv. Liquified gas carriers	30	3.17	9.5
v. Conventional large passenger vessels which are used for cruise purpose also	30	3.17	9.5
vi. Coastal service ships of all categories	30	3.17	9.5
vii. Offshore supply and support vessels	20	4.75	13.91
viii. Catamarans and other high speed passenger ships or boats	20	4.75	13.91
ix. Drill ships	25	3.8	11.29
x. Hovercrafts	15	6.33	18.1
xi. Dredgers, tugs, survey launches, barges and other similar ships used mainly for dredging purposes	14	6.79	19.26
xii. Fishing vessels with wooden hull	10	9.5	25.89
2. Vessels ordinarily operating on inland waters –
i. Speed boats	13	7.31	20.58
ii. Other vessels	28	3.39	10.15

VIII. Aircrafts or helicopters [NESD]	20	4.75	13.91

IX. Railways sidings, tramways, locomotives, rolling stocks and railways used by concerns, excluding railway concerns [NESD]	15	6.33	18.1

X. Ropeway structures [NESD]	15	6.33	18.1

XI. Office equipment [NESD]	5	19	45.07

XII. Computers and data processing units [NESD]
1. Servers and networks	6	15.83	39.3
2. End user devices, such as desktops, laptops, etc.	3	31.67	63.16

XIII. Laboratory equipment [NESD]
1. General Laboratory equipment	10	9.5	25.89
2. Laboratory equipment used in educational institutions	5	19	45.07

XIV. Electrical Installations and Equipment [NESD]	10	9.5	25.89

XV. Hydraulic works, pipelines and sluices [NESD]	15	6.33	18.1