Section 33 Income Tax Act 2025: Who Can Claim Depreciation?

A practical legal guide to deduction for depreciation on business assets, the 180-day restriction, additional depreciation and unabsorbed depreciation under Section 33 of the Income-tax Act, 2025.

Updated: 10 November 2026

Applicable law: Section 33 of the Income-tax Act, 2025, applicable from 1 April 2026. The rates for ordinary depreciation are prescribed under the applicable rules and should be checked for the relevant asset and tax year.

Who can claim depreciation under Section 33?

Under Section 33(1), depreciation is available on qualifying assets owned wholly or partly by the assessee and used for the purposes of business or profession, subject to the section's conditions. Eligible tangible assets include buildings, machinery, plant and furniture. Eligible intangible assets include know-how, patents, copyrights, trademarks, licences, franchises and comparable business or commercial rights acquired on or after 1 April 1998. Goodwill of a business or profession is expressly excluded.

The statutory provision refers to assets used wholly and exclusively for business or profession, while Section 33(3)(b) separately provides proportionate depreciation where tangible assets have mixed use.

How is depreciation calculated?

Written down value of a block of assets - Section 33(3)

Ordinarily, depreciation is calculated at the prescribed percentage of the written down value (WDV) of the relevant block of assets. If a tangible asset is partly used for non-business purposes, the Assessing Officer may restrict the deduction to a fair proportion reflecting business use. Where actual cost of machinery or plant has been deducted under Section 54, Section 33(3) depreciation is not available for it.

Power generation undertakings - Section 33(2)

For qualifying assets of an undertaking engaged in generation, or generation and distribution, of power, depreciation is calculated at the prescribed percentage of actual cost, subject to applicable provisions.

Assets used for fewer than 180 days - Section 33(4)

Where an asset covered by Section 33(2) or (3) is acquired during the tax year and put to business use for fewer than 180 days in that year, the deduction is restricted to 50% of the prescribed depreciation rate. Both statutory conditions must be considered.

When is additional depreciation allowed?

Sections 33(8) and 33(9) provide additional depreciation for qualifying new machinery or plant acquired and installed by an assessee engaged in manufacture or production of an article or thing, or generation, transmission or distribution of power, subject to statutory exclusions and conditions.

20% of actual cost: ordinarily available in the year of acquisition and first use, subject to the special 180-day rule.
10% plus 10%: where the qualifying new asset is acquired and first put to use for fewer than 180 days, 10% is available in that tax year and the remaining 10% in the immediately succeeding tax year.
Exclusions: ships and aircraft, previously used machinery or plant, specified office or residential installations, office appliances, road transport vehicles and assets whose entire actual cost has already been deducted are subject to the statutory exclusions.

Additional depreciation is distinct from ordinary depreciation; eligibility must be examined separately.

Other important provisions

Succession, amalgamation and demerger - Section 33(5)

The aggregate deduction for predecessor and successor, or relevant companies in an amalgamation or demerger, cannot exceed the depreciation that would have been allowable without the transaction. The deduction is apportioned by reference to the number of days the assets were used.

Improvements to leased buildings - Section 33(6)

Qualifying capital expenditure on construction, renovation, extension or improvement of a business building held under lease or other occupancy right may be treated as a building owned by the assessee for depreciation purposes.

Depreciation even if not claimed - Section 33(7)

The section applies whether or not the assessee has claimed depreciation when computing total income.

Assets sold, discarded, demolished or destroyed - Section 33(10)

In the circumstances specified for tangible assets depreciated under Section 33(2), a deficiency between written down value and money payable, including scrap value, may be deducted when the asset is disposed of or destroyed after its first-use year and the deficiency is actually written off in the books.

Insufficient profits and unabsorbed depreciation - Section 33(11)

Where business profits before the depreciation deduction are insufficient, Section 33(11) restricts the current-year deduction and provides for the unallowed amount to be added to the depreciation deduction of succeeding tax years, subject to Sections 112(3) and 113(4). The detailed statutory computation should be followed.

Relevant statutory definitions - Section 33(12)

Assets: Tangible buildings, machinery, plant and furniture, and specified intangible business or commercial rights, excluding goodwill.

Know-how: Industrial information or technique likely to assist manufacture or processing, or the working and exploration of mineral deposits, as detailed in Section 33(12)(b).

Sold: Includes exchange or compulsory acquisition, with specified exclusions for qualifying amalgamations and banking reorganisations under Section 33(12)(c).

Written down value of block of assets: Has the meaning assigned in Section 41(1)(c).

Actual cost: The cost determined under the applicable provisions, including Section 39; the amount relevant for depreciation can differ from the purchase invoice amount.

Practical illustrations

Example 1 - Ordinary depreciation: Assume a qualifying block has WDV of Rs. 10,00,000 and an applicable prescribed rate of 15%. Depreciation would ordinarily be Rs. 1,50,000, subject to statutory adjustments and restrictions. The 15% figure is illustrative, not a statement of the rate for every asset.

Example 2 - First use for fewer than 180 days: Assume a new qualifying asset costing Rs. 4,00,000 is acquired and first used for 100 days and its prescribed ordinary depreciation rate is 15%. The restricted ordinary rate is 7.5%, giving Rs. 30,000, subject to block-level calculations and other provisions.

Example 3 - Additional depreciation: If eligible new plant costing Rs. 10,00,000 qualifies under Sections 33(8) and (9) but is first used for fewer than 180 days, additional depreciation may be Rs. 1,00,000 in the first tax year and Rs. 1,00,000 in the next tax year, subject to all conditions.

Frequently asked questions

Is depreciation allowed on goodwill?

No. Goodwill of a business or profession is excluded from eligible intangible assets under Section 33.

Can depreciation be claimed on a leased office renovation?

Qualifying capital expenditure on improvements to a building occupied under a lease or other occupancy right may be eligible under Section 33(6).

Does the 180-day rule apply to every asset?

No. Section 33(4) applies when an asset referred to in Sections 33(2) or (3) is acquired during the tax year and put to business use for fewer than 180 days during that year.

Is additional depreciation available on office equipment?

Office appliances are excluded under Section 33(8); other assets must independently meet the detailed statutory conditions.

Is Section 33 of the 2025 Act the same as Section 33 of the 1961 Act?

No. Section 33 of the Income-tax Act, 2025 concerns depreciation. Depreciation under the Income-tax Act, 1961 was principally governed by Section 32; Section 33 of the 1961 Act concerned development rebate.

Official statutory references

Official Section 33 Income-tax Act 2025 - amended text Income-tax Act 2025 and Rules

This article is for general legal information. For an actual claim, verify the current prescribed rate, classification of the asset, tax-year facts and applicable amendments.