Schedule II Useful lives to compute depreciation
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SCHEDULE II
(See section 123)
USEFUL LIVES TO COMPUTE DEPRECIATION
PART ‘A’
1. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value. The useful life of an asset is 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.
2. For the purpose of this Schedule, the term depreciation includes amortisation.
3. Without prejudice to the foregoing provisions of paragraph 1,—
1Substituted by G.S.R. 627(E), dated 29th August 2014, with effect from 29 August 2014. Earlier read: "sub-paragraph (i) of paragraph 3"(i) 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 more than five per cent. of the original cost of the asset:
1Substituted by G.S.R. 627(E), dated 29th August 2014, with effect from 29 August 2014. Earlier read: "sub-paragraph (i) of paragraph 3"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.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"(ii) 3Substituted by G.S.R. 1075(E), dated 17th November 2016, with effect from 1 April 2016. Earlier read: "sub-paragraph (iii) of paragraph 3"For intangible assets, 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. Amortisation in such cases may be done as follows:—
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"(a) Mode of amortization
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Amortisation Rate = x 100Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Amortisation Amount=
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Cost of Intangible Assets (A) x Amorisation AmountSubstituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Cost of Intangible Assets (A)
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Actual Revenue for the year (B)
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Projected Revenue from Intangible Asset (till the end of the concession period) (C)
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"(b) Meaning of particulars are as follows :—
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Cost of Intangible Assets (A) = Cost incurred by the company in accordance withSubstituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"the accounting standards.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Actual Revenue for the year (13) = Actual revenue (Toll Charges) received during the
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"accounting year.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Projected Revenue from Intangible Total projected revenue from the Intangible Assets
Asset (C) as provided to the project lender at the time ofSubstituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"financial closure/agreement.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"The amortisation amount or rate should ensure that the whole of the cost of the intangible asset is amortised over the concession period. Revenue shall be reviewed at the end of each financial year and projected revenue shall be adjusted to reflect such changes, if any, in the estimates as will lead to the actual collection at the end of the concession period.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"(c) Example:—
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Cost of creation of Intangible Assets : Rs. 500 CroresSubstituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Total period of Agreement : 20 YearsSubstituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Time used for creation of Intangible Assets : 2 Years
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Intangible Assets to be amortised in : 18 YearsSubstituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Assuming that the Total revenue to be generated out of Intangible Assets over the period would be Rs. 600 Crores, in the following manner:—
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Year No. Revenue( In Rs. Crores) Remarks
Year 1 5 Actual
Year 2 7.5 Estimate *
Year 3 10 Estimate *
Year 4 12.5 Estimate *
Year 5 17.5 Estimate *
Year 6 20 Estimate *
Year 7 23 Estimate *
Year 8 27 Estimate *
Year 9 31 Estimate *
Year 10 34 Estimate *
Year 11 38 Estimate *
Year 12 41 Estimate *
Year 13 46 Estimate *
Year 14 50 Estimate *
Year 15 53 Estimate *
57 Estimate *
Year 16 60 Estimate*
Year 17 67.5
Year 18 Estimate *Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"600 Total
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"‘*’ will be actual at the end of financial year.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Based on this the charge for first year would be Rs. 4.16 Crore (approximately) (i.e. Rs. 5/Rs. 600 x Rs. 500 Crores) which would be charged to profit and loss and 0.83% (i.e. Rs. 4.16 Crore/ Rs. 500 Crore x 100) is the amortisation rate for the first year.
Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "sub-paragraph (i) to (iii) of paragraph 3"Where a company arrives at the amortisation amount in respect of the said Intangible Assets in accordance with any method as per the applicable Accounting Standards, it shall disclose the same.
PART ‘B’
4. 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’
5. 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 30 Years
Structure
(c) Factory buildings -do-
(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 15 Years
covered under specific industries
4Substituted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014. Earlier read: "clause (b)"(b) continuous process plant for which no special rate has been 25 Yearsprescribed under (ii) below [NESD]
(ii) Special Plant and Machinery 13 Years
(a) Plant and Machinery related to production and exhibition of -do-
Motion Picture Films 13 Years1. 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
2. Projecting equipment for exhibition of films
(b) Plant and Machinery used in glass manufacturing
1. Plant and Machinery except direct fire glass melting furnaces —
Recuperative and regenerative glass melting furnaces
2. Plant and Machinery except direct fire glass melting furnaces 8 Years
—Moulds[NESD] 10 Years
3. Float Glass Melting Furnaces [NESD] 8 Years
(c) Plant and Machinery used in mines and quarries—Portable underground machinery and earth moving machinery used in open cast mining [NESD]
(d) Plant and Machinery used in Telecommunications [NESD]
1. Towers 18 Years 2. Telecom transceivers, switching centres, transmission and other 13 Years
network equipment 18 Years
-do-
3. Telecom—
Ducts, Cables and optical fibre
4. Satellites 25 Years (e) Plant and Machinery used in exploration, production and -do-
refining oil and gas [NESD] -do- 1. Refineries -do- 2. Oil and gas assets (including wells), processing plant and 30 Years
-do-
facilities 8 Years
3. Petrochemical Plant
4. Storage tanks and related equipment -do-
5. Pipelines
6. Drilling Rig 40 Years 7. Field operations (above ground) Portable boilers, drilling tools, -do-
-do-
well-head tanks, etc. -do-
8. Loggers
(f) Plant and Machinery used in generation, transmission and 22 Years
35 Years
distribution of power [NESD] 30 Years
1. Thermal/ Gas/ Combined Cycle Power Generation Plant
2. Hydro Power Generation Plant -do-
3. Nuclear Power Generation Plant
4. Transmission lines, cables and other network assets 20 Years 5. Wind Power Generation Plant -do- 6. Electric Distribution Plant -do- 7. Gas Storage and Distribution Plant -do-
8. Water Distribution Plant including pipelines
(g) Plant and Machinery used in manufacture of steel 25 Years
1. Sinter Plant
2. Blast Furnace 40 Years 3. Coke ovens -do- 4. Rolling mill in steel plant -do- 5. Basic oxygen Furnace Converter -do-
(h) Plant and Machinery used in manufacture of non-ferrous metals
5. Equipments for Calcination [NESD] -do-
6. Copper Smelter [NESD] -do-
7. Roll Grinder 40 Years
8. Soaking Pit 30 Years
9. Annealing Furnace -do-
10. Rolling Mills -do-
11. Equipments for Scalping, Slitting , etc. [NESD] -do-
12. Surface Miner, Ripper Dozer, etc., used in mines 25 Years
13. Copper refining plant [NESD] -do-(i) Plant and Machinery used in medical and surgical operations 13 Years [NESD]
1. Electrical Machinery, X-ray and electrotherapeutic apparatus 15 Years
and accessories thereto, medical, diagnostic equipments, 20 Years
namely, Cat-scan, Ultrasound Machines, ECG Monitors, etc. -do-
2. Other Equipments. -do-
(j) Plant and Machinery used in manufacture of pharmaceuticals -do-and chemicals [NESD]
1. Reactors 12 Years
2. Distillation Columns
3. Drying equipments/Centrifuges and Decanters 20 Years
4. Vessel/storage tanks 15 Years
(k) Plant and Machinery used in civil construction 10 Years
1. Concreting, Crushing, Piling Equipments and Road Making 9 Years
Equipments 12 Years
2. Heavy Lift Equipments— 15 YearsCranes with capacity of more than 100 tons
Cranes with capacity of less than 100 tons 10 Years
3. Transmission line, Tunneling Equipments [NESD] 8 Years4. Earth-moving equipments
5. Others including Material Handling/Pipeline/Welding 10 Years
Equipments [NESD]
(l) Plant and Machinery used in salt works [NESD] V. Furniture and fittings [NESD]
(i) General furniture and fittings
(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. VI. Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds
2. Motor buses, motor lorries, motor cars and motor taxies used in 6 Years
a business of running them on hire 8 Years3. Motor buses, motor lorries and motor cars other than those used -do-
in a business of running them on hire 8 Years4. Motor tractors, harvesting combines and heavy vehicles 25 Years
5. Electrically operated vehicles including battery powered or fuel 20 Yearscell powered vehicles 25 Years VII. Ships [NESD] 20 Years
30 Years
1. Ocean-going ships
(i) Bulk Carriers and liner vessels -do-
(ii) Crude tankers, product carriers and easy chemical carriers with -do-20 Years
or without conventional tank coatings. -do-
(iii) Chemicals and Acid Carriers: 25 Years
(a) With Stainless steel tanks 15 Years
(b) With other tanks 10 Years
(iv) Liquified gas carriers 14 Years(v) Conventional large passenger vessels which are used for cruise 13 Years
purpose also 28 Years
(vi) Coastal service ships of all categories 20 Years
(vii) Offshore supply and support vessels 15 Years(viii) Catamarans and other high speed passenger for ships or boats
(ix) Drill ships 15 Years
(x) Hovercrafts 5 Years(xi) Fishing vessels with wooden hull
(xii) Dredgers, tugs, barges, survey launches and other similar ships 6 Years
3 Years used mainly for dredging purposes
2. Vessels ordinarily operating on inland waters— 10 Years
(i) Speed boats
(ii) Other vessels VIII. Aircrafts or Helicopters [NESD] IX. Railways sidings, locomotives, rolling stocks, tramways and
railways used by concerns, excluding railway concerns [NESD] X. Ropeway structures [NESD] XI. Office equipment [NESD] XII. Computers and data processing units [NESD]
(i) Servers and networks
(ii) End user devices, such as, desktops, laptops, etc. XIII. Laboratory equipment [NESD]
(i) General laboratory equipment
(ii) Laboratory equipments used in educational institutions 5 Years
10 years
XIV. Electrical Installations and Equipment [NESD] 15 Years
XV. Hydraulic works, pipelines and sluices [NESD] Notes.—
1. “Factory buildings” does not include offices, godowns, staff quarters.
2. Where, during any financial year, any addition has 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 rata basis 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.
3. The following information shall also be disclosed in the accounts, namely:—
(i) depreciation methods used; and
(ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule.
Substituted by G.S.R. 627(E), dated 29th August 2014, with effect from 29 August 2014. Earlier read: "paragraph 4"4(a) 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.
Substituted by G.S.R. 627(E), dated 29th August 2014, with effect from 29 August 2014. Earlier read: "paragraph 4"(b) The requirement under sub-paragraph (a) shall be voluntary in respect of the financial year commencing on or after the 1st April, 2014 and mandatory for financial statements in respect of financial years commencing on or after the 1st April, 2015.
6Text omitted by amendmentParagraph 5 omitted by G.S.R. 237(E), dated 31st March 2014, with effect from 1 April 2014
6. The useful lives of assets working on shift basis 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 incase of the triple shift the depreciation shall be calculated on the basis of 100% for that period.
7. From the date this Schedule comes into effect, the carrying amount of the asset as on that date—
(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;
(b) after retaining the residual value, Substituted by G.S.R. 627(E), dated 29th August 2014, with effect from 29 August 2014. Earlier read: "shall be recognized"may be recognised in the opening balance of retained earnings where the remaining useful life of an asset is nil.
8. “Continuous process plant” means a plant which is required and designed to operate for twenty-four hours a
day.