Depreciation Calculator
Model asset book values, tax deductions, and depreciation schedules under SLM and WDV.
Total acquisition cost including shipping and installation
Estimated resale value at end of asset lifecycle
Number of operating years asset will be actively used
Choose corporate accounting or taxation write-off standard
Tax vs Book Accounting
Results
Schedule complies with schedule II of Companies Act & Section 32 Income Tax.
Annual Depreciation Schedule
| Year | Opening Book Value | Depreciation | Accumulated Depreciation | Closing Book Value |
|---|---|---|---|---|
| Year 1 | ₹5,00,000 | ₹90,000 | ₹90,000 | ₹4,10,000 |
| Year 2 | ₹4,10,000 | ₹90,000 | ₹1,80,000 | ₹3,20,000 |
| Year 3 | ₹3,20,000 | ₹90,000 | ₹2,70,000 | ₹2,30,000 |
| Year 4 | ₹2,30,000 | ₹90,000 | ₹3,60,000 | ₹1,40,000 |
| Year 5 | ₹1,40,000 | ₹90,000 | ₹4,50,000 | ₹50,000 |
SLM vs WDV Depreciation Formulas & Principles
Depreciation systematically allocates the depreciable cost of a physical asset over its estimated useful economic life. The two primary financial methodologies represent fundamentally different expense patterns:
Annual Dep = Depreciable Base ÷ Useful Life
SLM Rate % = (Annual Dep ÷ Cost) × 100
Year 1 Dep = Cost × WDV Rate %
Subsequent Dep = Opening Book Value × WDV Rate %
Key Distinction: SLM charges an identical monetary deduction every single year. WDV accelerates deductions into the early years of operation, reflecting higher initial asset wear, technological decay, and offsetting rising future repair costs.
Step-by-step worked examples
Consider an industrial manufacturing machine acquired for ₹5,00,000, with an estimated useful lifecycle of 5 years and a terminal salvage value of ₹50,000:
| Period | SLM Yearly Charge | SLM Closing Book Value | WDV Yearly Charge (36.90%) | WDV Closing Book Value |
|---|---|---|---|---|
| Year 1 | ₹90,000 | ₹4,10,000 | ₹1,84,521 | ₹3,15,479 |
| Year 2 | ₹90,000 | ₹3,20,000 | ₹1,16,424 | ₹1,99,055 |
| Year 3 | ₹90,000 | ₹2,30,000 | ₹73,459 | ₹1,25,596 |
| Year 4 | ₹90,000 | ₹1,40,000 | ₹46,350 | ₹79,246 |
| Year 5 | ₹90,000 | ₹50,000 | ₹29,246 | ₹50,000 |
| Total Write-Off | ₹4,50,000 | Rate: 18.00% | ₹4,50,000 | Rate: 36.90% |
The "Tax Shield" Timing Advantage
Depreciation is a non-cash expense that shields operating income from income taxes. The cash tax saving equals:
Cash Tax Shield = Depreciation Expense × Corporate Tax Rate
Because money today is worth more than money in the future, WDV yields a higher Present Value of Tax Shields. Writing off ₹1,84,521 in Year 1 saves ₹46,130 in cash taxes immediately (at 25% tax), compared to only ₹22,500 under SLM.
Statutory Accounting vs. Taxation Standards
- Indian Income Tax Act (Section 32): Strictly mandates the Written Down Value (WDV) method computed on a consolidated "Block of Assets" basis (Plant & Machinery 15%, Computers 40%, Furniture 10%, Buildings 10%).
- Companies Act 2013 (Schedule II): Permits either SLM or WDV based on the asset's true pattern of economic consumption. Companies must also practice component depreciation for major subsystems.
- Deferred Tax Asset / Liability: Divergence between book depreciation (SLM) and tax depreciation (WDV) creates timing differences recorded as Deferred Tax Liabilities (DTL).
Assumptions & Financial Limitations
- Salvage Value Ceiling: An asset cannot be depreciated below its estimated salvage or scrap value. Once the net book value matches salvage, depreciation deductions must legally cease.
- Non-Linear Real-World Decay: Standard accounting depreciation does not mirror actual market resale prices; secondhand machine values fluctuate based on industry demand, technological disruption, and manufacturer warranty status.
- Exclusion of Asset Impairment: Standard depreciation models do not reflect extraordinary economic write-downs (impairment tests under Ind AS 36 / IAS 36) or statutory upward asset revaluations.
Frequently asked questions
Why do tax authorities prefer WDV over SLM?
Can an asset be depreciated below its salvage value?
What is the fundamental difference between SLM and WDV?
How is salvage value estimated for capital assets?
How does depreciation affect cash flow and taxes?
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Annual Depreciation
₹90,000