Computer, Laptop & Printer Depreciation Rate: How To Calculate, Formula, Examples

Computers, laptops and printers have become vital tools for companies and individuals in today's fast-paced technological environment. Such devices, like any other asset, have a finite lifespan and depreciate over time. Understanding computer, laptop, and printer depreciation rates is critical for proper financial reporting and tax purposes. 

In this article, we will get into the details of understanding the depreciation rate of computers, laptops and printers as per Income Tax Act and Companies Act.

Computer and Laptop Depreciation Rate

The depreciation rate is the percentage by which an asset drops in its value throughout its total useful life. The Income Tax Act 1961 covers depreciation rates under Section 32. As computers and laptops are tangible assets, it is presumed that they will depreciate in value with every passing year. 

One critical component for corporate organisations is identifying which equipment qualifies as a computer in order to take advantage of a 40% depreciation rate. This enables them to deduct 40% of the cost of computers and software from their taxable business revenue. 

If an item does not match the definition of a computer, it may nevertheless be eligible for the plant and machinery depreciation rate of 15%. This distinction is critical in maximising tax benefits.

Laptop and Computer Depreciation Rate As Per Companies Act

Computer and laptop depreciation rate as per Income Tax Act is based on the useful life and residual value of the assets. The rate applicable in this case applies to assets purchased after or on 1st April 2014, with a residual value considered 5%.

The rates applicable as per Companies Act 2013 are as follows:

• Rate as per straight line method: 31.67%
• Rate as per written down value (WDV): 63.16%
• Useful life: 3 years

It is vital to remember that if you wish to use the WDV method of depreciation on your computers, you must generate a new depreciation rate using the formula below: 

R = {1-(s/c)^1/n}*100

Here, 

n = remaining useful years of asset

c = cost of asset / written down value of an asset

s = scrap value of an asset at the end of its useful life

R = rate of depreciation (%)

Laptop and Computer Depreciation Rate As Per Income Tax Act

The Income Tax Act has its own rules for computing depreciation rates for laptops and computers. These rates are often higher than those under Companies Act, allowing quicker tax write-offs. 

In general, the Income Tax Act follows a block system where different categories of assets fall into specific blocks, each with its prescribed depreciation rates. Computer and Laptop depreciation rate as per Income Tax Act falls under the asset class of Plant and Machinery.

The rate of deduction considered here is 40%. However, you must follow all the clauses under Rule 5(2) to be eligible for a 40% depreciation rate. 

You can calculate depreciation for your laptops and computers under the specific rate of the Income Tax Act by using the following formulas:

• Depreciation rate per year = 1/useful asset’s life
• Depreciation value per year = (Cost of an asset - Salvage value of an asset) / Depreciation rate per year

Printer Depreciation Rate

Printers are essential in workplaces and households because they allow us to make tangible copies of digital documents. Printers, like computers and laptops, depreciate over time.

The depreciation rate on printers falls under the category of computer peripherals, where you can claim a deduction of 40%. Residual value and useful life of the printer are the factors that determine this rate.

Printer Depreciation Rate as Per Companies Act

As per Companies Act 2013, the depreciation rate applicable to printers falls under the category of “Special Plant and Machinery ''. This rate is determined based on the useful life of the printer, which is 13 years.

The depreciation rate is charged based on two different methods. They are:

• Straight Line Method (SLM): 7.31%
• Written Down Value (WDV): 20.58%

Printer Depreciation Rate as Per Income Tax Act

As per the Income Tax Act, printers fall under the asset class of Plant and Machinery, where the applicable rate is 40%. During the fiscal year 2017-18, the depreciation rate changed, resulting in a maximum applicable rate of 40% on any asset. To be qualified for this depreciation rate, eligibility for all of the provisions in Rule 5(2) must be met. 

Final Word

When calculating the computer, printer or laptop depreciation rate, you need to consider the useful life of the asset, along with other factors such as cost, brand, and estimated salvage value of assets. 

This will help you in understanding the depreciated value of the asset clearly and help with your taxes. Individuals and businesses can successfully manage their assets and guarantee compliance with relevant regulations by following the necessary rules of the Income Tax Act and Companies Act. 

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