What is Block of Assets for Income Tax

Block of Asset [Section-2(11)]

“Block of Assets means a group of assets falling within a class of assets comprising:

1. Tangible assets being

1. Buildings
2. Plant & Machinery
3. Furniture;

2. Intangible assets being know how, patents, copy-rights, trademarks, licenses, franchisees or any other business or commercial rights of similar nature.”

Thus, for the purpose of charging depreciation, fixed assets of the assessee shall be grouped in 4 distinct categories as below:-

1. Building:- 5%, 10%, 40%
2. Plant & Machinery:- 15%, 20%, 30%, 40%
3. Furniture & Fittings:- 10%
4. Intangible Assets:- 25%

The assets will be first classified in each category out of (a) to (d) above. The Income Tax Act prescribes rates of depreciation for assets falling under each category. Now, the assessee shall identify the rate which is applicable to each of his assets falling in that category thus forming blocks applicable for his/her assets.

“Block” simply means the grouping of assets having same rate of depreciation shall fall under one block. Majorly, two blocks are there:-

1. Tangible Assets covering building, plant & machinery and furniture;
2. Intangible Assets;

Further, under tangible assets, assets which have same rate of depreciation will fall under one block and similarly in case of intangible asset.