Useful lives to compute Depreciation [S. 123, Sch II]

PART ‘A’

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.

Depreciation = Depreciable amount of an asset÷divided by useful life of such asset

The depreciable amount of an asset = the cost of an asset or other amount substituted for cost, less its residual value.

The useful life of an asset → the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.

For the purpose of this Schedule, the term depreciation includes amortisation.
Without prejudice to the foregoing provisions of paragraph 1,—
1. The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the residual value of an asset shall not be > 5% of the original cost of the asset:
  Provided that where a company adopts a useful life different from what is specified in Part C or uses a residual value different from the limit specified above, the financial statements shall disclose such difference and provide justification in this behalf duly supported by technical advice;
2. For intangible assests, the relevant Indian Accounting Standards (Ind AS) shall apply. Where a company is not required to comply with the Indian Accounting Standards (Ind AS), it shall comply with relevant Accounting Standards under Companies (Accounting Standards) Rules, 2006.", except in case of intangible assets (Toll Roads) created under ‘Build, Operate and Transfer’, ‘Build, Own, Operate and Transfer’ or any other form of public private partnership route in case of road projects.

PART ‘B’

The useful life or residual value of any specific asset, as notified for accounting purposes by a Regulatory Authority constituted under an Act of Parliament or by the Central Government shall be applied in calculating the depreciation to be provided for such asset irrespective of the requirements of this Schedule.

PART ‘C’

Subject to Parts A and B above, the following are the useful lives of various tangible assets:

Nature of assets		Useful Life
I.	Buildings [NESD]
	(a) Buildings (other than factory buildings) RCC Frame Structure	60 Years
	(b) Buildings (other than factory buildings) other than RCC Frame Structure	30 Years
	(c) Factory buildings	30 years
	(d) Fences, wells, tube wells	5 Years
	(e) Others (including temporary structure, etc.)	3 Years
II.	Bridges, culverts, bunders, etc. [NESD]	30 Years
III.	Roads [NESD]
	(a) Carpeted roads
	(i) Carpeted Roads – RCC	10 Years
	(ii) Carpeted Roads-other than RCC	5 Years
	(b) Non-carpeted roads	3 Years
IV.	Plant and Machinery
	(i) General rate applicable to plant and machinery not covered under special plant and machinery
	(a) Plant and Machinery other than continuous process plant not covered under specific industries	15 Years
	(b) Continuous process plant for which no special rate has been prescribed under (ii) below [NESD]	25 Years
	(ii) Special Plant and Machinery
	(a) Plant and Machinery related to production and exhibition of Motion Picture Films
	1. Cinematograph films—Machinery used in the production and exhibition of cinematograph films, recording and reproducing equipments, developing machines, printing machines, editing machines, synchronizers and studio lights except bulbs	13 Years
	2. Projecting equipment for exhibition of films	13 Years
	(b) Plant and Machinery used in glass manufacturing
	1. Plant and Machinery except direct fire glass melting furnaces — Recuperative and regenerative glass melting furnaces	13 Years
	2. Plant and Machinery except direct fire glass melting furnaces — Moulds [NESD]	8 Years
	3. Float Glass Melting Furnaces [NESD]	10 Years
	(c) Plant and Machinery used in mines and quarries—Portable underground machinery and earth moving machinery used in open cast mining [NESD]	8 Years
	(d) Plant and Machinery used in Telecommunications [NESD]
	1. Towers	18 Years
	2. Telecom transceivers, switching centres, transmission and other network equipment	13 Years
	3. Telecom—Ducts, Cables and optical fibre	18 Years
	4. Satellites	18 Years
	(e) Plant and Machinery used in exploration, production and refining oil and gas [NESD]
	1. Refineries	25 Years
	2. Oil and gas assets (including wells), processing plant and facilities	25 Years
	3. Petrochemical Plant	25 Years
	4. Storage tanks and related equipment	25 Years
	5. Pipelines	30 Years
	6. Drilling Rig	30 Years
	7. Field operations (above ground) Portable boilers, drilling tools, well-head tanks, etc.	8 Years
	8. Loggers	8 Years
	(f) Plant and Machinery used in generation, transmission and distribution of power [NESD]
	1. Thermal/ Gas/ Combined Cycle Power Generation Plant	40 Years
	2. Hydro Power Generation Plant	40 Years
	3. Nuclear Power Generation Plant	40 Years
	4. Transmission lines, cables and other network assets	40 Years
	5. Wind Power Generation Plant	22 Years
	6. Electric Distribution Plant	35 Years
	7. Gas Storage and Distribution Plant	30 Years
	8. Water Distribution Plant including pipelines	30 Years
	(g) Plant and Machinery used in manufacture of steel
	1. Sinter Plant	20 Years
	2. Blast Furnace	20 Years
	3. Coke ovens	20 Years
	4. Rolling mill in steel plant	20 Years
	5. Basic oxygen Furnace Converter	25 Years
	(h) Plant and Machinery used in manufacture of non-ferrous metals
	1. Metal pot line [NESD]	40 Years
	2. Bauxite crushing and grinding section [NESD]	40 Years
	3. Digester Section [NESD]	40 Years
	4. Turbine [NESD]	40 Years
	5. Equipments for Calcination [NESD]	40 Years
	6. Copper Smelter [NESD]	40 Years
	7. Roll Grinder	40 Years
	8. Soaking Pit	30 Years
	9. Annealing Furnace	30 Years
	10. Rolling Mills	30 Years
	11. Equipments for Scalping, Slitting , etc. [NESD]	30 Years
	12. Surface Miner, Ripper Dozer, etc., used in mines	25 Years
	13. Copper refining plant [NESD]	25 Years
	(i) Plant and Machinery used in medical and surgical operations [NESD]
	1. Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories thereto, medical, diagnostic equipments, namely, Cat-scan, Ultrasound Machines, ECG Monitors, etc.	13 Years
	2. Other Equipments	15 Years
	(j) Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD]
	1. Reactors	20 Years
	2. Distillation Columns	20 Years
	3. Drying equipments/Centrifuges and Decanters	20 Years
	4. Vessel/storage tanks	20 Years
	(k) Plant and Machinery used in civil construction
	1. Concreting, Crushing, Piling Equipments and Road Making Equipments	12 Years
	2. Heavy Lift Equipments—
	— Cranes with capacity of more than 100 tons	20 Years
	— Cranes with capacity of less than 100 tons	15 Years
	3. Transmission line, Tunneling Equipments [NESD]	10 Years
	4. Earth-moving equipments	9 Years
	5. Others including Material Handling /Pipeline/Welding Equipments [NESD]	12 Years
	(l) Plant and Machinery used in salt works [NESD]	15 Years
V.	Furniture and fittings [NESD]
	(i) General furniture and fittings	10 Years
	(ii) Furniture and fittings used in hotels, restaurants and boarding houses, schools, colleges and other educational institutions, libraries; welfare centres; meeting halls, cinema houses; theatres and circuses; and furniture and fittings let out on hire for use on the occasion of marriages and similar functions.	8 Years
VI.	Motor Vehicles [NESD]
	1. Motor cycles, scooters and other mopeds	10 Years
	2. Motor buses, motor lorries, motor cars and motor taxies used in a business of running them on hire	6 Years
	3. Motor buses, motor lorries and motor cars other than those used in a business of running them on hire	8 Years
	4. Motor tractors, harvesting combines and heavy vehicles	8 Years
	5. Electrically operated vehicles including battery powered or fuel cell powered vehicles	8 Years
VII.	Ships [NESD]
	I. Ocean-going ships
	(i) Bulk Carriers and liner vessels	25 Years
	(ii) Crude tankers, product carriers and easy chemical carriers with or without conventional tank coatings.	20 Years
	(iii) Chemicals and Acid Carriers:
	(a) With Stainless steel tanks	25 Years
	(b) With other tanks	20 Years
	(iv) Liquified gas carriers	30 Years
	(v) Conventional large passenger vessels which are used for cruise purpose also	30 Years
	(vi) Coastal service ships of all categories	30 Years
	(vii) Offshore supply and support vessels	20 Years
	(viii) Catamarans and other high speed passenger for ships or boats	20 Years
	(ix) Drill ships	25 Years
	(x) Hovercrafts	15 Years
	(xi) Fishing vessels with wooden hull	10 Years
	(xii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes	14 Years
	II. Vessels ordinarily operating on inland waters—
	(i) Speed boats	13 Years
	(ii) Other vessels	28 Years
VIII.	Aircrafts or Helicopters [NESD]	20 Years
IX.	Railways sidings, locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns [NESD]	15 Years
X.	Ropeway structures [NESD]	15 Years
XI.	Office equipment [NESD]	5 Years
XII.	Computers and data processing units [NESD]
	(i) Servers and networks	6 Years
	(ii) End user devices, such as, desktops, laptops, etc.	3 Years
XIII.	Laboratory equipment [NESD]
	(i) General laboratory equipment	10 Years
	(ii) Laboratory equipments used in educational institutions	5 Years
XIV.	Electrical Installations and Equipment [NESD]	10 Years
XV.	Hydraulic works, pipelines and sluices [NESD]	15 Years

Notes.

"Factory buildings" does not include offices, godowns, staff quarters.
Where, during any financial year, any additionhas been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro ratabasis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
The following information shall also be disclosed in the accounts, namely:—

depreciation methods used; and

the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule.

Useful life specified in part C of the schedule is for whole of the asset and where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately. - voluntary in respect of FY commencing on or after the 1st April, 2014 and mandatory for FS in respect of FYs commencing on or after the 1st April, 2015.
The useful lives of assets working on shiftbasis have been specified in the Schedule based on their single shift working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be calculated on the basis of 100% for that period.
From the date this Schedule comes into effect, the carrying amount of the assetas on that date—
1. shall be depreciated over the remaining useful life of the asset as per this Schedule;
2. after retaining the residual value, may be recognized in the opening balance of retained earnings where the remaining useful life of an asset is nil.
‘‘Continuous process plant’’ means a plant which is required and designed to operate for 24 hours a day.