Mobile phones are no longer accessories; they are core business tools. Whether you’re a freelancer answering client calls, a director managing work emails, or a company issuing phones to employees, mobile devices are legitimate business assets. And like any asset, they lose value over time.
Under Indian tax laws, this loss in value is accounted for through depreciation. Yet many people either overclaim it, underclaim it, or miss it entirely. In my experience, mobile phone depreciation is one of the most ignored—but completely allowable—deductions when done correctly. Understanding the rules can quietly save you tax year after year.
What Is Depreciation, in Simple Words?
Depreciation reflects wear and tear or the gradual reduction in value of an asset used in business.
For tax purposes, depreciation:
- Spreads the cost of an asset over its useful life
- Reduces taxable income legally
- Is regulated by specific rates under the Income Tax Act
Mobile phones fall into this category when they are used for business or professional purposes.
Depreciation Rate for Mobile Phone Under Income Tax Act
Here’s the key point most people are looking for:
The depreciation rate for mobile phones under the Income Tax Act is 15%, calculated using the Written Down Value (WDV) method.
Or stated another way—
For taxation purposes, the depreciation rate is 15% of the WDV (Written Down Value) of a mobile phone.
This rate applies uniformly, whether the phone is a basic device or a premium smartphone.
Why Is the Rate 15%?
Mobile phones are treated as part of “Plant and Machinery” under the Income Tax Rules.
They are not classified separately, nor are they considered computers (which attract higher depreciation). The tax law deliberately keeps mobile phones under general machinery to avoid misuse and overvaluation.
This conservative approach ensures consistency across businesses.
What Is the WDV Method, Really?
The Written Down Value (WDV) method means depreciation is calculated on the remaining value of the asset—not the original purchase price every year.
Let’s make this real.
Example
You buy a mobile phone for business use at ₹40,000.
- Year 1 depreciation @ 15% = ₹6,000
- WDV after Year 1 = ₹34,000
- Year 2 depreciation @ 15% = ₹5,100
- WDV after Year 2 = ₹28,900
This pattern continues until the value becomes negligible.
When Can You Claim Depreciation on a Mobile Phone?
You can claim depreciation if:
- The phone is used for business or professional purposes
- The expense is recorded in books of accounts
- You own the phone (not rented or reimbursed personally without records)
If the phone is partly personal and partly business, depreciation should be claimed proportionately.
Depreciation for Individuals, Freelancers, and Companies
One common myth is that depreciation is only for companies. Not true.
Individuals & Freelancers
If you:
- File ITR with business or professional income
- Use your phone for client communication or work
You can claim depreciation as a business asset.
Companies & Firms
Companies commonly:
- Capitalise employee phones
- Claim depreciation annually
- Maintain asset registers
The 15% rate applies here as well.
Mobile Phone vs Computer Depreciation – Don’t Confuse Them
This mistake pops up often.
- Computers & laptops: Higher depreciation rate
- Mobile phones: Fixed at 15%
Even smartphones used for email, video calls, or apps do not qualify as computers under tax rules. Claiming higher depreciation can raise red flags during assessment.
GST Angle (Brief but Important)
If GST credit is claimed on a mobile phone:
- Depreciation is allowed only on the value excluding GST
- Double benefit (GST depreciation on full value) is not permitted
This is where bookkeeping discipline matters.
Common Mistakes People Make
From experience, these errors repeat every year:
- Claiming 100% expense instead of depreciation
- Using the wrong depreciation rate
- Claiming depreciation on personal phones
- Not maintaining invoices or usage proof
These small slips can undo an otherwise clean tax return.
Practical Tip From Real Life
A freelancer once told me, “It’s just a phone, is it even worth recording?”
That one phone—over four years—reduced taxable income by tens of thousands. Small, consistent claims always matter more than dramatic last-minute deductions.
Simple Compliance Checklist
Before claiming depreciation on a mobile phone, ensure:
- ✅ Bill is in your or business name
- ✅ Phone used for work
- ✅ Asset capitalised in books
- ✅ Depreciation calculated at 15% WDV
That’s all. No complicated paperwork.
Conclusion
With a 15% depreciation rate on WDV, mobile phones are valid, sensible business assets that deserve proper accounting.
Handled correctly, they quietly reduce tax burdens year after year. Handled casually, they invite avoidable questions.
If you want to ensure accurate asset classification, depreciation, and compliance without stress, professional guidance helps.
👉 Need expert help with depreciation or tax compliance? Visit callmyca.com to get it done right.
