Appendix I of the Income-tax Rules, 2026

Where this rule sits

Appendix I gives effect to Section 33 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

← Rule 333  ·  Appendix II →

What this rule does

Appendix I, referred to in rule 25, is the Table of rates at which depreciation is admissible. Column (3) throughout expresses the allowance as a percentage of written down value. Part A covers tangible assets in four items and Part B covers intangible assets in one; nine Notes follow.

Item I, Building, has four sub-items: buildings used mainly for residential purposes except hotels and boarding houses, 5; buildings other than those used mainly for residential purposes and not covered by sub-items (1) or (3), 10; buildings for installing machinery and plant forming part of a water supply project or water treatment system put to use for providing infrastructure facilities under section 80-ia(4)(i) of the Income-tax Act, 1961, 40; and purely temporary erections such as wooden structures, 40.

Item II, Furniture and fittings including electrical fittings, is a single entry at 10.

Item III, Machinery and Plant, is the long item. Sub-item (1), machinery and plant other than those covered by sub-items (2), (3) and (8), is 15. Sub-item (2) covers motor cars other than those used in a business of running them on hire: 15 for those acquired on or after the 1st April, 1990, and 30 for those acquired on or after the 23rd August, 2019 but before the 1st April, 2020 and put to use before the 1st April, 2020. Sub-item (3) runs from aeroplanes and aeroengines at 40, through motor buses, motor lorries and motor taxis used in a business of running them on hire at 30 — rising to 45 for those acquired on or after the 23rd August, 2019 but before the 1st April, 2020 and put to use before the 1st April, 2020 — and a new commercial vehicle acquired on or after the 1st January, 2009 but before the 1st October, 2009 and put to use before the 1st October, 2009 at 40; moulds used in rubber and plastic goods factories at 30; long lists of air pollution control equipment, water pollution control equipment and solid waste control and recycling equipment, all at 40; machinery and plant used in the semi-conductor industry at 30; and life saving medical equipment, itemised from defibrillators to laparoscopes, at 40. Sub-item (4), containers made of glass or plastic used as re-fills, is 40. Sub-item (5), computers including computer software, is 40. Sub-item (6), machinery and plant acquired and installed on or after the 1st September, 2002 in a water supply project or water treatment system put to use for providing infrastructure facility under section 80-ia(4)(i) of the 1961 Act, is 40. Sub-item (7) collects industry-specific plant and the energy saving and renewable energy devices, almost all at 40 — specialised boilers and furnaces, instrumentation and monitoring systems, waste heat recovery equipment, co-generation systems, electrical equipment, burners, gas cylinders, glass melting furnaces, solar and wind devices, electrically operated vehicles, biogas plants — with mineral oil concerns' plant used in field operations above and below ground at 40 but oil wells not covered by those clauses at 15. Sub-item (8), books owned by assessees carrying on a profession, whether annual publications or not, and books owned by assessees carrying on business in running lending libraries, is 40.

Item IV, Ships, is 20 throughout: ocean-going ships including dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels with wooden hull; vessels ordinarily operating on inland waters not covered by sub-item (3); and vessels ordinarily operating on inland waters being speed boats.

Part B, intangible assets, is a single block at 25: know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.

The Notes settle the boundaries. Note 1: "Buildings" include roads, bridges, culverts, wells and tubewells. Note 2: a building is deemed to be used mainly for residential purposes if the built up floor area used for residential purposes is not less than sixty-six and two-third per cent of its total built-up floor area, and includes any such building in the factory premises. Note 3: for a structure or work by way of renovation or improvement in or in relation to a building referred to in section 33(6), the percentage applied is that against sub-item (1) or (2) of item 1 of Part A as appropriate to the class of building, while an extension is treated as if it were a separate building. Note 4: water treatment system includes systems for desalination, demineralisation and purification of water. Note 5: electrical fittings include electrical wiring, switches, sockets, other fittings and fans. Note 6: "commercial vehicle" takes in heavy goods vehicle, heavy passenger motor vehicle, light motor vehicle, medium goods vehicle and medium passenger motor vehicle, but not maxi-cab, motor-cab, tractor or road-roller, those expressions having the meanings in section 2 of the Motor Vehicles Act, 1988. Note 7: "computer software" means any computer program recorded on any disc, tape, perforated media or other information storage device. Note 8: machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from the plant to the storage facility. Note 9: "speed boat" means a motor boat driven by a high speed internal combustion engine capable of propelling it at a speed exceeding 24 kilometres per hour in still water and so designed that it will plane when running at speed.

Why it is there

Depreciation is allowed by block of assets at a percentage the Act does not itself state, so the Appendix is where the rate actually lives. It is organised by block rather than by asset name because that is how the allowance is computed, and the Notes exist because the boundaries between blocks decide the rate — whether a building is mainly residential, whether a vehicle is a commercial vehicle, whether a boat is a speed boat, what counts as computer software. The dated entries preserve rates that attached to assets acquired and put to use in specific windows, so the Table has to be read with the acquisition and put-to-use dates alongside the description.

Who it applies to

• An assessee claiming depreciation on a block of tangible assets under Part A
• An assessee claiming depreciation on know-how, patents, copyrights, trademarks, licences, franchises or similar business or commercial rights under Part B
• An assessee incurring expenditure on renovation, improvement or extension of a building referred to in section 33(6)

The figures, and what each one turns on

What this means in practice

Every percentage in column (3) is of written down value, so the Table gives a rate and not an amount, and it is applied to the block rather than to the individual asset. Several entries turn on dates and not on description alone: the 30 for motor cars and the 45 for motor buses, lorries and taxis on hire apply only to assets acquired on or after the 23rd August, 2019 but before the 1st April, 2020 and put to use before the 1st April, 2020, and the 40 for a new commercial vehicle only to the 2009 window, so an identical vehicle bought outside those windows falls back to the general rate for its class. The higher building rates are not general either — sub-item (3) is confined to buildings for installing machinery and plant forming part of a water supply project or water treatment system used for infrastructure facilities, and sub-item (4) to purely temporary erections. Note 3 is easily missed: renovation or improvement of a building referred to in section 33(6) takes the percentage for sub-item (1) or (2) as appropriate to the class of building, but an extension is treated as if it were a separate building and rated accordingly. Two rates within a single sub-item can differ sharply — mineral oil concerns' field plant is at 40 while oil wells not covered by those clauses are at 15 — so the sub-item has to be read to its end. Part B is a single block for all intangibles listed, at 25, with no separate rate for any one of them.

An example

A firm buys computers with their software for Rs 20 lakh and a motor car for Rs 15 lakh, neither used in a business of running cars on hire, and both are acquired and put to use in the tax year. The computers, including the software, go into the block at 40 under item III sub-item (5), and the car into the block at 15 under item III sub-item (2)(i); the rates apply to the written down value of each block. In the same year the firm spends on extending its factory office building: under Note 3 the extension is treated as if it were a separate building, so the percentage appropriate to that class of building applies to it rather than the rate for the machinery it houses.

Where you meet this rule

You meet it in the depreciation schedule attached to the accounts and in the computation of income every year, and again whenever an asset is classified into a block — most often on a vehicle, a building improvement or software.

The words themselves

What people get wrong

• Treating the percentages as rates on cost. Column (3) states the depreciation allowance as a percentage of written down value.
• Claiming 30 on any motor car or 45 on any bus, lorry or taxi on hire. Those rates are confined to assets acquired on or after the 23rd August, 2019 but before the 1st April, 2020 and put to use before the 1st April, 2020.
• Putting every building improvement at the building rate. Note 3 applies the sub-item (1) or (2) percentage to renovation or improvement of a building referred to in section 33(6), but treats an extension as a separate building.
• Reading item I sub-item (3) as a general 40 for factory buildings. It covers buildings for installing machinery and plant forming part of a water supply project or water treatment system used for providing infrastructure facilities under section 80-ia(4)(i) of the 1961 Act.
• Deciding "mainly residential" by impression. Note 2 fixes it at not less than sixty-six and two-third per cent of the total built-up floor area.
• Assuming all of a mineral oil concern's plant carries one rate. Field operations plant above and below ground is at 40, while oil wells not covered by those clauses are at 15.
• Rating a fast boat by its use. Note 9 defines a speed boat by an engine capable of exceeding 24 kilometres per hour in still water and a hull designed to plane, and item IV puts it at 20 in any event.
• Looking for separate rates for patents or trademarks. Part B is a single block at 25 for know-how, patents, copyrights, trademarks, licences, franchises and similar rights.

Read with

• Rule 25