Understanding Solar Depreciation in India
For commercial and industrial (C&I) users, solar is not just an energy-saving asset but also a powerful tax-saving tool. Under the Income Tax Act, solar power equipment is eligible for Accelerated Depreciation.
How it works:
- Normal Depreciation: Solar assets are eligible for a 40% depreciation rate under the Written Down Value (WDV) method.
- Additional Depreciation: New industrial undertakings or power generation companies can claim an additional 20% depreciation in the first year of commissioning.
- The Half-Year Rule: If an asset is put to use for less than 180 days in a financial year (typically commissioned after October 3rd), only 50% of the eligible depreciation can be claimed in that year.
Pro Tip: Commissioning your project before September 30th allows you to claim the FULL
40% (plus 20% additional, if applicable) in the very first year, significantly boosting your Year 1 cash
flow.