Rate of depreciation under income tax act for new motor cars is 50%
• It would seem so.
• Under section 32 of the Act, depreciation is available in respect of a motor car owned by the assessee and used for the purpose of a business or profession at such percentage as may beprescribed.
• Under the second proviso to section 31(1)(ii), where an asset is put to use for less than 180 days in a previous year, then the depreciation in respect of that asset is restricted to 50 per cent of the amount calculated at the percentage prescribed for the asset.
• Under the third proviso to section 32(1)(ii), depreciation is allowed in respect of commercial vehicles (defined in the explanation to the proviso - this includes motor cars as will be seen later) acquired between October 1, 1998 and March 31, 1999 at the prescribed percentage without restricting the depreciation to 50 per cent thereof as required by the second proviso referred to earlier.
• The rates of depreciation are prescribed by rule 5 of the Income-tax Rules, 1962 (the Rules) read with Appendix - I thereto.
• What is pertinent to note is that item III of Appendix-I deals with rates of depreciation for machinery and plant. Under sub- item (1A) of item III, motor cars, other than those