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Depreciation as per Companies Act, 2013

 

Schedule II – Useful Lives to Compute Depreciation 

PART A

  1. 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.
  2. In this Schedule, amortization is included in the definition of depreciation.
  3. 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)

  1. 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

Schedule II of the Companies Act ,2013