Appendix II explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Appendix II is the table of rates of depreciation on the actual cost of assets of an undertaking that generates, or generates and distributes, power. It sits beside Appendix I, which gives rates on written down value. This article reproduces Appendix II as printed and explains who uses it, as per the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026. Later notifications should be checked.
Under rule 25(3), the allowance under section 33(2) for assets of the undertaking specified in Appendix II is calculated at the percentage in column (3) on the actual cost to the assessee. Under rule 25(4) the aggregate depreciation on an asset over the years cannot exceed its actual cost. Under rule 25(5) the undertaking may opt for Appendix I instead, by the due date under section 263(1)(c) for the tax year in which it begins to generate power; under rule 25(6) the option is final.
The rule and the section
Section 33(2) of the Income-tax Act, 2025 says that for assets of an undertaking engaged in generation, or generation and distribution, of power, the depreciation deduction is such percentage of actual cost as may be prescribed; see section 33. Rule 25 prescribes it, and our post on rule 25 deals with the rule as a whole. The sub-rules that matter here are:
- Rule 25(3). The allowance under section 33(2) for assets acquired on or after 1st April, 1977 and specified in column (2) of the Table in Appendix II is calculated at the percentage in column (3) on the actual cost to the assessee of the assets used for the business of the assessee at any time during the tax year.
- Rule 25(4). The aggregate depreciation allowed under section 33(2) on any asset over the tax years cannot exceed the actual cost of the asset.
- Rule 25(5). The undertaking may, at its option, be allowed depreciation under rule 25(1) read with Appendix I instead of Appendix II, if the option is exercised on or before the due date for furnishing the return of income under section 263(1)(c) for the tax year in which it begins to generate power.
- Rule 25(6). An option under rule 25(5), once exercised, is final and applies to all the subsequent tax years.
The text does not say anything more about the undertaking than section 33(2) and rule 25 print. The column heads of the Table are: (1) serial number, (2) class of assets, and (3) "Depreciation allowance as percentage of actual cost". For the rates on written down value, see Appendix I.
Power undertakings often have to choose between the two tables in the first year; our books of accounts compliance team can help model the choice before the due date passes.
The Table: classes (a) to (p)
| Class | Asset | Rate (per cent of actual cost) |
|---|---|---|
| (a) | Plant and machinery in generating stations, including plant foundations: | |
| (a)(i) | Hydro-electric | 3.4 |
| (a)(ii) | Steam electric NHRS and waste heat recovery boilers or plants | 7.84 |
| (a)(iii) | Diesel electric and gas plant | 8.24 |
| (b) | Cooling towers and circulating water systems | 7.84 |
| (c) | Hydraulic works forming part of the hydro-electric system: | |
| (c)(i) | Dams, spillways, weirs, canals, reinforced concrete flumes and syphons | 1.95 |
| (c)(ii) | Reinforced concrete pipelines and surge tanks, steel pipelines, sluice gates, steel surge tanks, hydraulic control valves and other hydraulic works | 3.4 |
| (d) | Building and civil engineering works of permanent character, not mentioned above: | |
| (d)(i) | Office and showrooms | 3.02 |
| (d)(ii) | Containing thermo-electric generating plant | 7.84 |
| (d)(iii) | Containing hydro-electric generating plant | 3.4 |
| (d)(iv) | Temporary erection such as wooden structures | 33.4 |
| (d)(v) | Roads other than kutcha roads | 3.02 |
| (d)(vi) | Others | 3.02 |
| (e) | Transformers, transformer (kiosk) sub-station equipment and other fixed apparatus, including plant foundations: | |
| (e)(i) | Transformers (including foundations) having a rating of 100 kilovolt amperes and over | 7.81 |
| (e)(ii) | Others | 7.84 |
| (f) | Switchgear including cable connections | 7.84 |
| (g) | Lightning arrestor: | |
| (g)(i) | Station type | 7.84 |
| (g)(ii) | Pole type | 12.77 |
| (g)(iii) | Synchronous condenser | 5.27 |
| (h) | Batteries | 33.4 |
| (printed under (h), no class letter) (i) | Underground cable including joint boxes and disconnection boxes | 5.27 |
| (printed under (h), no class letter) (ii) | Cable duct system | 3.02 |
| (i) | Overhead lines including supports: | |
| (i)(i) | Lines on fabricated steel operating at nominal voltages higher than 66 kilovolt | 5.27 |
| (i)(ii) | Lines on steel supports operating at nominal voltages higher than 13.2 kilovolts but not exceeding 66 kilovolts | 7.84 |
| (i)(iii) | Lines on steel or reinforced concrete supports | 7.84 |
| (i)(iv) | Lines on treated wood supports | 7.84 |
| (j) | Meters | 12.77 |
| (k) | Self-propelled vehicles | 33.40 |
| (l) | Air-conditioning plants: | |
| (l)(i) | Static | 12.77 |
| (l)(ii) | Portable | 33.40 |
| (m) | (i) Office furniture and fittings; (ii) office equipments; (iii) internal wiring including fittings and apparatus; (iv) street light fittings | 12.77 for each of the four |
| (n) | Apparatus let on hire: | |
| (n)(i) | Other than motors | 33.4 |
| (n)(ii) | Motors | 12.77 |
| (o) | Communication equipment: | |
| (o)(i) | Radio and high frequency carrier system | 12.77 |
| (o)(ii) | Telephone lines and telephones | 12.77 |
| (p) | Any other assets not covered above | 7.69 |
A printing point
After class (h), Batteries, the print shows two sub-items numbered (i) and (ii), underground cable and cable duct system, with their own rates, and then a class lettered (i), overhead lines. The two sub-items have no class letter of their own. Their rates are given as printed (5.27 and 3.02); the class they belong to should be confirmed from the official text.
How the rates work
Each rate is a percentage of the actual cost of the asset, not of the written down value, and it applies each year until the total allowed reaches the actual cost (rule 25(4)).
Example with invented figures: Himalaya Power Ltd has an undertaking that began generating power. It owns a hydro-electric plant at an actual cost of Rs. 20,00,00,000 and its office building at an actual cost of Rs. 5,00,00,000. Under Appendix II, the plant (class (a)(i)) attracts 3.4 per cent of actual cost and the office building (class (d)(i)) 3.02 per cent. In a full year of use the allowances are Rs. 68,00,000 and Rs. 15,10,000, ignoring any other limit in the Act. If the company would rather use Appendix I, it must exercise the option under rule 25(5) by the due date for the return under section 263(1)(c) for the tax year in which it begins to generate power, and the option then binds all later years.
Need help choosing between Appendix I and Appendix II?
The option in rule 25(5) is made once and is final, so it is worth modelling both routes against the asset mix and the expected profit before the due date arrives. If you would like help with that comparison, speak to our books of accounts compliance specialists.
Key takeaways
- Appendix II applies to assets of an undertaking that generates, or generates and distributes, power (section 33(2)).
- Rates run from 1.95 per cent (dams and canals) to 33.4 per cent (temporary erections, batteries, vehicles, portable air-conditioners, apparatus let on hire).
- The aggregate depreciation on an asset cannot exceed its actual cost (rule 25(4)).
- The option to use Appendix I is made by the due date for the year power generation begins and is final.
- The rate is on actual cost, unlike Appendix I, which is on written down value.
Read next
- Appendix I: depreciation rates for blocks of assets
- Rule 25: depreciation under section 33
- Section 33 of the Income-tax Act, 2025: depreciation and additional depreciation
- Form 141: challan-cum-statement for rent, property, contractor and virtual digital asset
Disclaimer: Based on the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026, as consulted on 2 October 2026. It explains the words of the rules and forms only; later notifications, the forms and utilities on the e-filing portal, circulars and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.