In today’s digital era, mobile phones are no longer a luxury but a necessity. They are used not just for communication but also as vital tools for business operations, financial transactions, data storage, and more. Since mobile phones are considered an asset for both individuals and businesses, they are subject to depreciation under accounting principles.
At KKS Capital Advisors, we help businesses and professionals understand the depreciation rate on mobile, how to calculate it, and the correct way to apply depreciation in compliance with both the Income Tax Act and the Companies Act.
This guide will provide a complete explanation of the mobile depreciation rate, formulas, calculation methods, and practical examples to ensure you apply the rules correctly.
Depreciation refers to the gradual reduction in the value of an asset due to wear and tear, obsolescence, or usage over time. Just like laptops, machinery, or office equipment, mobile phones lose value every year.
For accounting purposes, the cost of a mobile phone is not expensed fully in the year of purchase. Instead, its cost is spread across its useful life through depreciation.
At KKS Capital Advisors, we emphasize that applying the correct phone depreciation rate is important for:
At KKS Capital Advisors, we guide businesses to apply the right depreciation for mobile phones so they can save taxes while maintaining accurate records.
The depreciation rate on mobile depends on which law or accounting standard is being followed. Primarily, there are two major frameworks:
Let’s look at both in detail.
Under the Income Tax Act, mobile phones are categorized as part of the “Plant and Machinery” group. The prescribed mobile depreciation rate as per income tax is 15% on the Written Down Value (WDV) method.
This means that every year, 15% of the remaining value of the mobile phone is charged as depreciation.
This continues until the phone reaches a negligible value.
At KKS Capital Advisors, we advise clients to carefully follow the mobile depreciation rate as per the income tax to optimize tax deductions.
The Companies Act, 2013, prescribes depreciation based on the useful life of assets instead of a fixed percentage.
For mobile phones, the useful life is generally considered to be 5 years. Depreciation is calculated using the Straight Line Method (SLM) or the Written Down Value (WDV) Method, depending on company policy.
So, each year, ₹10,000 is charged as depreciation until the asset’s useful life ends.
We explain that the depreciation on mobiles as per the Companies Act provides flexibility, but companies must follow the useful life guidelines mentioned in Schedule II of the Act.
Two common formulas are used to calculate depreciation on mobile phones:
Depreciation = Opening WDV × Rate of Depreciation
This method is mostly used under the Income Tax Act.
Depreciation = Cost of Asset ÷ Useful Life
This method is commonly followed under the Companies Act.
At KKS Capital Advisors, we recommend using the method based on compliance requirements and reporting objectives.
Let’s explore real examples to understand how depreciation is applied:
Year 2 Depreciation = 51,000 × 15% = ₹7,650
So, ₹12,000 is charged annually for 5 years.
At KKS Capital Advisors, we prepare such schedules for clients to ensure clarity in both tax and financial reporting.
The phone depreciation rate can vary depending on:
At KKS Capital Advisors, we analyze these factors before recommending the most accurate depreciation schedule for businesses.
In financial records, depreciation is recorded as follows:
Journal Entry:
This reduces the asset’s book value and recognizes depreciation expense in the Profit & Loss Account.
At KKS Capital Advisors, we ensure that the depreciation for mobile phones is recorded systematically so that businesses maintain accurate asset registers.
Understanding the depreciation rate on mobile is crucial for both businesses and professionals who want to manage assets correctly, claim rightful tax deductions, and maintain accurate financial statements.
The mobile depreciation rate as per income tax (15% WDV) and the depreciation on mobile as per the Companies Act (5 years SLM/WDV) may differ, but both must be followed carefully depending on the purpose of reporting.
At KKS Capital Advisors, we help businesses calculate, record, and manage depreciation for mobile phones with complete compliance, ensuring accurate financial reporting and optimized tax planning.
By applying the right phone depreciation rate, companies can achieve a true reflection of their mobile assets while enjoying maximum tax benefits.
Also Read: The Income Tax Bill 2025
