Query on depreciation rates

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Harikrishna SP (Querist)
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08 June 2014 Dear Sir

What is the rate of depreciation as per It act 1961 for the building which has been taken on rent for running a hotel Industry

Description
Glass and Plywood work
Civil Work
Interior Design
Plumbing
Painting and polishing
Pop work
Fabrication
Fitting of Hardware
Electrical work

I need this information immediately unless i know this, i cannot complete the depreciation accounting satisfactorily

Please help

Harikrishna SP

Harikrishna SP (Querist)
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08 June 2014 Can anybody help me........Please

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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10 August 2024 Under the Income Tax Act, 1961, the depreciation rates for various types of assets used in running a business such as a hotel industry are specified under **Appendix I** to the Income Tax Rules, 1962. Here's a detailed breakdown based on the type of work you mentioned:

### **1. Building (Used for Running a Hotel Industry):**
- **Depreciation Rate:** 10% (under the category of "Building" or "Plant and Machinery" as per the Act).

**Note:** Since the building is taken on rent, the depreciation on the building itself cannot be claimed as it belongs to the lessor. However, the expenses related to improvements or alterations made to the building might be depreciated based on the nature of the work.

### **2. Depreciation Rates for Specific Types of Work:**

**a. Glass and Plywood Work:**
- **Category:** This would generally fall under "Furniture and Fixtures."
- **Depreciation Rate:** 10%

**b. Civil Work:**
- **Category:** Civil work related to construction and renovations can be categorized under "Building" or "Plant and Machinery" depending on the nature of the civil work.
- **Depreciation Rate:** If classified under "Building," the rate is 10%. For "Plant and Machinery," it is 15%.

**c. Interior Design:**
- **Category:** This would also fall under "Furniture and Fixtures" or potentially "Building."
- **Depreciation Rate:** 10% for Furniture and Fixtures or 10% for Building if it's related to structural changes.

**d. Plumbing:**
- **Category:** Generally included under "Plant and Machinery" if it's part of the infrastructure.
- **Depreciation Rate:** 15%

**e. Painting and Polishing:**
- **Category:** Typically part of "Building" or "Furniture and Fixtures."
- **Depreciation Rate:** 10%

**f. POP Work:**
- **Category:** Plaster of Paris (POP) work is generally included under "Building."
- **Depreciation Rate:** 10%

**g. Fabrication:**
- **Category:** Often part of "Plant and Machinery" if it pertains to equipment.
- **Depreciation Rate:** 15%

**h. Fitting of Hardware:**
- **Category:** This would fall under "Furniture and Fixtures" or "Plant and Machinery" depending on the type of hardware.
- **Depreciation Rate:** 10% for Furniture and Fixtures or 15% for Plant and Machinery.

**i. Electrical Work:**
- **Category:** Generally considered part of "Plant and Machinery."
- **Depreciation Rate:** 15%

### **Summary of Depreciation Rates:**

- **Building (leased/rented for business):** 10% (but generally, you don't claim depreciation on leased property; improvements can be considered based on the nature).
- **Furniture and Fixtures (including Interior Design, Glass & Plywood Work):** 10%
- **Plant and Machinery (including Plumbing, Fabrication, Electrical Work):** 15%

### **Important Notes:**

- **Improvement/Alteration:** Expenses related to improvements and alterations on leased property should be capitalized and depreciated as per the nature of the work.
- **Rental Property:** Depreciation on the actual building structure, which is not owned but rented, is typically not claimable.

Always ensure that you refer to the latest updates in the Income Tax Act or consult a tax professional for the most accurate and personalized advice.

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