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What is Written Down Value (WDV)?

Anshika Posted on October 03, 2025

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.

Which assets use the WDV method in India?

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

Can WDV be zero?

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

Why does India prefer WDV for taxation?

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

How is WDV calculated?

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

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.

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