Motor Vehicle Depreciation Rate 2019

Admittedly vehicle depreciation can be a complicated subject. Example a motor car was bought on 1 4 2019 for rs. But for commercial vehicles such as taxis and hire cars the rates are much higher 25 and 20 respectively because the estimated useful lives of those vehicles is shorter.

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Higher rate have been prescribed only for motor cars motor buses motor lorries and motor taxis.

Motor vehicle depreciation rate 2019.

Motor cycles scooters and other mopeds. Motor car motor cycle bike scooter other than those used in a business of running them on hire acquired on or after the 23rd day of august 2019 but before the 1st day of april 2020 and is put to use before the 1st day of april 2020. The rate of depreciation on motor cars and other motor vehicles has been amended and allowed a higher rate of depreciation for motor cars from 15 percent to 30 percent. Section 179 applies to the first year a vehicle is used for business purposes.

There is no existing rate of depreciation of 45 percent hence any motor vehicle purchased eligible for a 45 percent rate of depreciation shall form a new block of assets in machinery and plant. The central board of direct taxes cbdt has notified new depreciation rates of 30 and 45 on vehicles purchased between 23 08 2019 to 31 03 2020. Depreciation of vehicles for tax purposes can be claimed when used to produce taxable income. Most new small business owners don t know what business vehicle depreciation is let alone how to calculate it.

The section 179 deduction allows business owners to deduct up to 10 000 for cars and up to 25 000 for certain kinds of trucks and suvs. The depreciation of most cars according to tax office estimates of useful life is 12 5 of the vehicle cost per year. 10 00 000 so depreciation for fy 2019 20 10 00 000 x 15 1 50 000. Value of the motor car on 31 3 2020 10 00 000 1 50 000 8 50 000.

Cbdt has issued a notification no. Acquired on or after the 23rd day of august 2019 but before the 1st day of april 2020 and is put to use before the 1st day of april 2020. Put them in the special rate pool if the value of all the long life items you buy in a single accounting period the tax year if you re a sole trader or partner adds up to 100 000. Considering the deduction can lead to some serious tax savings it s important you understand what you re entitled to.

Rates of depreciation for income tax as applicable from the assessment year 2003 04 onwards. Motor vehicles nesd 1. 69 2019 dated 20 09 2019 and amended the rate of depreciation on motore cars and other motor vehicles under the income tax rules 1962. Section 179 deduction for car depreciation.

Under the income tax act depreciation is allowed only on written down value basis for motor vehicles.