BAJAJ FINSERV DIRECT LIMITED
Stocks Insights

What is Written Down Value (WDV)?

authour img
Anshika

Table of Contents

Written Down Value (WDV) is the net book value of an asset after accounting for depreciation. It is widely used in Indian accounting and taxation to reflect the asset’s reduced worth over time.

Written Down Value Meaning

WDV refers to the asset’s original purchase cost minus the accumulated depreciation. It shows the current book value, not the market value. For example, if a machine was bought for ₹5,00,000 and ₹1,50,000 has been depreciated, the WDV is ₹3,50,000. Unlike market value, WDV is used for internal accounting and tax reporting.

How Written Down Value Works

The written down value method is also known as the diminishing balance method. Depreciation is charged on the asset’s current book value each year, not the original cost.

Key Points:

  • Depreciation reduces each year as the base value shrinks.

  • Commonly used for machinery, vehicles, and tools.

  • Recognised under Indian Income Tax Act for tax deductions.

This method reflects the actual wear and tear more accurately than flat-rate methods.

Why is Written Down Value Important?

WDV is crucial for:

  • Tax Benefits: Higher depreciation in early years reduces taxable income.

  • True Asset Valuation: Reflects real-time asset usage and ageing.

  • Asset Replacement Decisions: Helps assess replacement timing and resale value.

  • Financial Reporting: Ensures compliance with accounting standards.

In India, WDV is preferred for fixed assets in both private and public sector accounting.

Written Down Value Method Advantages and Disadvantages

Advantages Disadvantages

Reflects actual asset usage

Asset value never reaches zero

Higher depreciation in early years (tax saving)

Complex calculations over time

Aligns with declining utility of assets

Uneven expense reporting across years

Accepted by Indian tax authorities

Not ideal for assets with uniform usage

How to Calculate Written Down Value

Formula:
WDV = Opening WDV × (1 – Depreciation Rate)

Example:

  • Cost: ₹1,00,000

  • Depreciation Rate: 10%

  • Year 1: ₹1,00,000 × (1 – 0.10) = ₹90,000

  • Year 2: ₹90,000 × (1 – 0.10) = ₹81,000

  • Year 3: ₹81,000 × (1 – 0.10) = ₹72,900

This method is easily applied using a written down value calculator or spreadsheet.

Written Down Value vs Straight Line Method

Feature WDV Method Straight Line Method (SLM)

Depreciation Style

Reducing balance

Equal amount each year

Expense Pattern

Higher in early years

Uniform throughout asset life

Use Case

Machinery, vehicles

Buildings, furniture

Complexity

Moderate to high

Simple to apply

Tax Preference (India)

Accepted under Income Tax Act

Less preferred for tax

WDV is ideal when asset value declines faster in early years, while SLM suits consistent-use assets.

Conclusion

The written down value method offers a realistic view of asset depreciation and tax efficiency. However, it may not suit all businesses. Choosing between WDV and SLM depends on asset type, usage pattern, and compliance needs.

Disclaimer

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

FAQs

How is WDV different from book value?

WDV is a type of book value after depreciation. Book value may also include other adjustments.

Machinery, vehicles, and tools commonly use WDV for tax and accounting purposes.

Yes. In Indian taxation, WDV can become zero when assets are fully depreciated or disposed of.

It allows higher depreciation in early years, reducing taxable income and encouraging capital investment.

Using the formula: WDV = Opening WDV × (1 – Depreciation Rate), applied annually.

View More
Hi! I’m Anshika
Financial Content Specialist

Anshika brings 7+ years of experience in stock market operations, project management, and investment banking processes. She has led cross-functional initiatives and managed the delivery of digital investment portals. Backed by industry certifications, she holds a strong foundation in financial operations. With deep expertise in capital markets, she connects strategy with execution, ensuring compliance to deliver impact. 

Academy by Bajaj Markets

eye icon 32014
share icon

All Things Tax

Navigate the tax maze with ease! Uncover Income Tax 101, demystify jargon with Terms for Beginners, and choose between Old or New Regimes.

Seasons 6
Episodes 25
Durations 1.3 Hrs
eye icon 54571
share icon

All Things Credit

Unlock the world of credit! From picking the perfect card to savvy loan management, navigate wisely.

Seasons 12
Episodes 56
Durations 3.0 Hrs
eye icon 32258
share icon

Money Management and Financial Planning

Money Management and Financial Planning covers personal finance basics, setting goals, budgeting...

Seasons 5
Episodes 19
Durations 1.1 Hrs
eye icon 15406
share icon

The Universe of Investments

Explore the investment cosmos! From beginner's guides to sharp-witted strategies, explore India's treasure trove of options.

Seasons 5
Episodes 23
Durations 1.5 Hrs
eye icon 3203
share icon

Insurance Handbook

Discover essential insights on various types of insurance in India.

Seasons 2
Episodes 6
Durations 0.5 Hrs
eye icon 4324
share icon

Tech in Finance

Welcome to Tech in Finance, where we explore the exciting intersection of technology and finance...

Seasons 1
Episodes 5
Durations 0.3 Hrs
Home
Home
ONDC_BD_StealDeals
Steal Deals
CIBIL Score
CIBIL Score
Accounts
Accounts
Explore
Explore

Our Products