180-Day Rule for Depreciation: Full Rate vs Half Rate Explained
Assets acquired during the year and put to use for less than 180 days generally get only 50% of the normal tax depreciation for that year. Learn the practical calculation.
The 180-day rule for depreciation is one of the most common year-end fixed-asset questions.
For income-tax depreciation, an eligible asset acquired during the year and put to use for less than 180 days is generally allowed only 50% of the depreciation otherwise calculated at the prescribed rate for that year.
Two conditions matter
The restriction applies where the asset is:
- acquired during the relevant year; and
- put to use for business or profession for less than 180 days during that year.
The purchase date alone is therefore not enough. The put-to-use date also matters.
Simple example
Suppose an addition falls in a tax block carrying a 15% annual depreciation rate and the asset is acquired and put to use for less than 180 days during the year.
The depreciation attributable to that addition for the year is restricted to 50% of the amount otherwise calculated at 15%—effectively 7.5% for that addition, subject to the block rules and other applicable provisions.
If the asset qualifies for the full-year rate, the normal prescribed block rate applies.
Do not use invoice date blindly
An asset can be purchased on one date but installed and made ready for use later.
Useful evidence may include:
- installation report;
- commissioning certificate;
- delivery and acceptance records;
- insurance commencement;
- production or usage logs; and
- other management or operational evidence.
The appropriate evidence depends on the nature of the asset.
What about additional depreciation?
Where additional depreciation is otherwise available and the eligible asset is used for less than 180 days, the law restricts the current-year additional depreciation and may allow the statutory balance in the immediately succeeding year, subject to the applicable conditions.
Book depreciation can be completely different
The income-tax 180-day rule is not a general accounting rule for book depreciation.
Book depreciation should be computed under the accounting framework applicable to the entity, using the appropriate accounting policy, useful life or method.
Therefore, tax WDV and book WDV should not be forced to match.
What changes under the Income-tax Act, 2025?
For Tax Year 2026-27 onwards, depreciation is reorganised under the new Act, but the 180-day concept continues. Section 33 restricts depreciation to 50% of the prescribed rate where the eligible asset is acquired during the tax year and put to use for less than 180 days.
How assureOffice helps on the financial statement side
assureOffice Financial Builder supports PPE and book-depreciation workings for financial statement preparation and can help organise current-year additions and closing book WDV.
Tax depreciation should remain a separate tax working using the applicable tax blocks and rates.
Read also: Book depreciation vs income-tax depreciation.
For every asset addition, capture both the acquisition date and the put-to-use date. That single control prevents many depreciation errors.