Accelerated depreciation lets a business write off a large share of an asset’s cost against its taxable profit in the first year, instead of spreading it over many years. For solar systems, the first-year claim is 40% of the cost.
How it works
Depreciation is deducted from taxable profit. A bigger deduction in year one means less tax that year. The benefit is the deduction multiplied by your tax rate.
₹10 lakhFirst-year tax saving on a ₹1 crore system, at a 25% tax rate40% × ₹1 crore × 25%
Example
A company buys a ₹1 crore rooftop system. It claims 40%, or ₹40 lakh, as depreciation in the first year. At a 25% effective tax rate, that cuts its tax bill by ₹10 lakh, so the system effectively costs ₹90 lakh in year one and pays back sooner.
Who can use it
- Only businesses that own the system (CAPEX), not RESCO buyers.
- Only businesses with taxable profit. A loss-making company gets little immediate benefit.
- It changes when tax is paid, not the total tax over the asset’s life, so the gain is mainly in cash flow.
Related: RESCO vs CAPEX.
Sources
Figures last checked on 26 September 2026.