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Form 26 Clause 36: What Changes for Depreciation in the New Tax Audit Report
The transition from Form 3CD to Form 26, how Clause 36 covers depreciation, and how to produce an audit-ready depreciation schedule that reconciles to the return.
1 July 2026 6 min read
The tax audit report is being restructured, with Form 26 taking over from the familiar Forms 3CA/3CB/3CD. For fixed assets, the depreciation disclosure that used to sit in 3CD Clause 18 now lives in Clause 36 — and the underlying computation is unchanged, but the presentation is stricter.
What Clause 36 asks for
- A block-wise depreciation matrix under the Income-tax Act (Rule 47), showing opening WDV, additions (split by ≥180 and <180 days), deductions, rate, depreciation and closing WDV.
- Additional depreciation under Section 32(1)(iia) shown separately for plant & machinery.
- A clean reconciliation between the depreciation claimed in the return and the schedule.
The freshness opportunity is real: with the format changing, teams that produce a correct, reconciled Clause 36 schedule early will save hours of rework at filing time. The risk is a schedule that doesn't tie back to the block computation used in the return.
AssetOS generates the Form 26 Clause 36 report in the required shape — Part 1 plant & machinery with additional depreciation, Part 2 other blocks — from the same income-tax block engine that drives your return, so the schedule and the return can't disagree.
Topics
Form 26 clause 36 depreciationForm 26 tax audit3CD clause 18depreciation scheduleless than 180 days assets