Windmill depreciation rate increase to 80% again.

Again wind energy devices & windmill depreciation rate for income tax purpose increase to 80%  and windmill developers will enjoy lower tax outgo while investing in windmills.

With effect from 1st April 2014, windmills developer can avail accelerated depreciation on windmills and wind energy special devices installed on or after 1st April, 2014 which allows the investing company to fast track the write-off of certain assets for tax purposes  The Income Tax department has amended the rules regarding this, through a notification 43/2014.

Earlier, a deduction up to 80 per cent was allowed if the wind project was installed on or before 31st March, 2012. Projects commissioned in the next half of the fiscal got a 40 per cent deduction and if developers commissioned the windmill on or after 1st April, 2012 will only be allowed 15 per cent depreciation. But wind equipment use to enjoy the 20 per cent additional depreciation in the first year when windmill put to use. That would make for an effective 35 per cent depreciation.

But now to encourage the windmill developers for joining the hand to accelerate the pace of windmill industry, government again decided to give the big fat windmill depreciation benefit of 80%. Accelerated windmill depreciation allowed developers to reduce their tax outgo in the first year as the 80% deduction of investments lowered the taxable profits.

Notification 43/2014 as follows:-

In exercise of the powers conferred by Section 295 read with Section 32 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

  1. (1) These rules may be called the Income-tax (8th Amendment) Rules, 2014.
    (2) They shall come into force on the date of their publication in the Official Gazette.
  2. In the Income-tax Rules, 1962, in the New Appendix I, in Part-A relating to Tangible Assets, under the
    heading III. Machinery and Plant, in item (8), in sub-item (xiii), –
    (a) In clause (l), for the words, figures and letters “installed on or before 31st day of March, 2012”, the
    words, figures and letters “ installed on or after the 1st day of April, 2014” shall be substituted; and
    (b) In clause (m), for the words, figures and letters “installed on or before 31st day of March, 2012”, the
    words, figures and letters “installed on or after 1st day of April, 2014” shall be substituted.

Download Notification 43/2014

3 thoughts on “Windmill depreciation rate increase to 80% again.

  1. Purchase of Used WTG machines ( wind mills ) Depreciation benefits under IT Act.

    We plan to purchase WTG machines originally installed in the year Mar-2006. In this context, we are under the impression that the used WTGs are eligible for the accelerated deprecation rate of 80%, where as few opinions are against our understanding that used WTGs are eligible only for normal depreciation rate.
    Can you please advise.

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