DEP RATES AS PER COMPANIES ACT 2013

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The Companies Act 2013 specifies an 8-year useful life for plant and machinery when calculating depreciation using the Written Down Value (WDV) method. The 11.88% rate is derived from the WDV formula, assuming a zero salvage value. This calculation effectively determines the annual depreciation charge for these assets.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

26 December 2024 WHAT IS THE LOGIC BEHIND 11.88% DEP RATE ON PLANT AND MACHINARY IN COMPANIES ACT 2013?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 December 2024 The Companies Act 2013 assigns a useful life of 8 years to these types of plants when calculating depreciation using the Written Down Value (WDV) method.
Depreciation Rate = 1 - (Salvage Value / Original Cost)^(1/Useful Life)
In this case, it's assumed that the salvage value is zero (or negligible). So the formula simplifies to:
Depreciation Rate = 1 - (0)^(1/8) = 1 - 0.8812 = 0.1188 or 11.88% (approximately)

https://gstguntur.com/depreciation-rate-chart-as-per-companies-act-2013-with-related-law

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

26 December 2024 PLEASE EXPLAIN WITH EXAMPLE THE ABOVE FORMULA

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