Zoho Books Fixed Assets: Setup, Depreciation & Compliance

By Ramakrishna Karolla 23 February 2026 16 min read

Zoho Books

fixed-assetszoho-booksdepreciationaccountingcompliancecompanies-actind-as

If your business owns laptops, machinery, vehicles, or furniture, you already have fixed assets. The question is: are you tracking them properly?

For years, businesses on Zoho Books had to rely on spreadsheets, third-party marketplace apps, or manual journal entries to manage their fixed assets. That changed in December 2024 when Zoho launched a native Fixed Assets module directly within Zoho Books.

This guide covers everything you need to know — from enabling the module and configuring depreciation, to aligning your setup with Indian accounting standards and the Companies Act 2013.

What Is the Fixed Assets Module in Zoho Books?

The Fixed Assets module is a built-in capability that allows you to record, track, depreciate, and dispose of long-term tangible assets within the same platform you use for daily accounting. It automates the full asset lifecycle:

• Acquisition — create assets directly, from bills, or from journal entries
• Depreciation — automatic calculations and journal entries each period
• Disposal — sale, write-off, or scrapping with gain/loss computation

No more maintaining a separate Excel register. No more forgetting to post monthly depreciation entries.

Availability

The module is available on Premium plan and above — across India, Global, and US editions.

How to Enable and Set Up Fixed Assets

Step 1: Enable the Module

Navigate to Settings > Preferences > General and check Fixed Assets. Save the preference. A new “Fixed Assets” section will appear in your left navigation.

Step 2: Set Up Your Chart of Accounts

Before creating any assets, you need three account types configured in your Chart of Accounts:

Best practice: Create separate accounts per asset class — one set for Computers, another for Furniture, another for Vehicles. This gives you clean reporting and aligns with Schedule III disclosure requirements.

A recommended Chart of Accounts structure:

Step 3: Create Asset Types (Categories)

Asset Types serve as templates that standardise depreciation settings across similar assets. Navigate to Fixed Assets > Manage Asset Types and create categories like:

• Computer Equipment — Straight-Line, 36 months useful life
• Furniture and Fixtures — Straight-Line, 120 months useful life
• Motor Vehicles — Declining Balance, 96 months useful life
• Plant and Machinery — Straight-Line, 180 months useful life
• Office Equipment — Straight-Line, 60 months useful life

Each asset type stores:

• Depreciation method
• Depreciation frequency (monthly or yearly)
• Useful life in months
• Computation type (Pro Rata or Non-Pro Rata)
• Linked accounts (asset, expense, accumulated depreciation)

Step 4: Record Your Assets

Three ways to create an asset:

1. Direct entry — go to Fixed Assets and fill in the form manually
2. From a bill — code a bill line item to a Fixed Asset account. When the bill is marked “Open,” a draft asset is automatically created in the Fixed Assets module
3. From a journal entry — a debit entry to a fixed asset account auto-generates a draft asset

Each asset captures: name, asset number (auto-generated), asset type, purchase date, purchase price, current value, salvage/residual value, serial number, warranty expiry, and custom fields.

Step 5: Mark Active and Start Depreciation

Review the draft asset, confirm the depreciation settings, and mark it as Active. Zoho Books will retroactively create all depreciation journal entries from the asset’s start date to the current date — no manual posting required.

Each journal entry records:

• Debit: Depreciation Expense account
• Credit: Accumulated Depreciation account

Depreciation Methods Supported

Computation Types

• Pro Rata — accounts for partial periods based on actual days the asset was in use
• Non-Pro Rata — uses full months/years regardless of the acquisition date within the period

Key Formulas

Straight-Line (Non-Pro Rata):

Annual Depreciation = (Current Value − Salvage Value) / Remaining Life in Years

Declining Balance (Non-Pro Rata):

Annual Depreciation = Current Value × (Depreciation Rate % / 100)

Pro Rata adjustment: multiply the annual figure by (days in use / days in period).

Asset Lifecycle in Zoho Books

Fixed Asset Management Process

The following diagram illustrates the end-to-end fixed asset management process in Zoho Books — from acquisition through depreciation to eventual disposal.

flowchart TD
    START([Asset Acquired]) --> ACQ_TYPE{How was the<br/>asset acquired?}

    ACQ_TYPE -->|Purchase Order / Bill| BILL[Record Bill in<br/>Zoho Books]
    ACQ_TYPE -->|Journal Entry| JE[Post Journal Entry<br/>Dr: Fixed Asset A/c]
    ACQ_TYPE -->|Direct Entry| DIRECT[Create Asset<br/>in FA Module]

    BILL --> DRAFT[Draft Asset<br/>Auto-Created]
    JE --> DRAFT
    DIRECT --> DRAFT

    DRAFT --> REVIEW{Review Asset<br/>Details}
    REVIEW -->|Incorrect| EDIT[Edit Asset Type,<br/>Useful Life, Salvage Value]
    EDIT --> REVIEW
    REVIEW -->|Correct| ACTIVATE[Mark as Active]

    ACTIVATE --> DEP_CALC[Depreciation<br/>Journals Created<br/>Retroactively]

    DEP_CALC --> PERIODIC[Monthly / Yearly<br/>Depreciation Runs]

    PERIODIC --> ANNUAL_CHECK{Annual<br/>Review}
    ANNUAL_CHECK -->|Revise useful life<br/>or residual value| UPDATE_DEP[Update Depreciation<br/>Settings Prospectively]
    UPDATE_DEP --> PERIODIC
    ANNUAL_CHECK -->|Physical verification| PHYS_VER[Verify Asset<br/>Exists and Is in Use]

    PHYS_VER --> PHYS_RESULT{Asset<br/>Status?}
    PHYS_RESULT -->|In use| PERIODIC
    PHYS_RESULT -->|Missing / Damaged| WRITEOFF_DEC{Write Off?}

    ANNUAL_CHECK -->|No changes needed| DEP_CHECK{Book Value =<br/>Salvage Value?}
    PERIODIC --> DEP_CHECK

    DEP_CHECK -->|No| PERIODIC
    DEP_CHECK -->|Yes| FULLY_DEP[Fully Depreciated<br/>Status Auto-Updated]

    FULLY_DEP --> DISPOSAL{Disposal<br/>Decision}
    WRITEOFF_DEC -->|Yes| WRITEOFF
    WRITEOFF_DEC -->|No| PERIODIC

    DISPOSAL -->|Sell| SELL[Create Invoice<br/>for Sale Proceeds]
    DISPOSAL -->|Scrap| WRITEOFF[Write Off<br/>Remaining Value]
    DISPOSAL -->|Continue holding| HOLD[Retain at<br/>Salvage Value]

    SELL --> GAIN_LOSS[System Computes<br/>Gain or Loss]
    WRITEOFF --> LOSS[Loss Entry<br/>Auto-Created]

    GAIN_LOSS --> JE_FINAL[Journal Entry:<br/>Derecognise Asset]
    LOSS --> JE_FINAL

    JE_FINAL --> REPORTS[Update Fixed<br/>Asset Register]
    HOLD --> REPORTS

    REPORTS --> TAX{Tax<br/>Compliance}
    TAX -->|Book depreciation| BOOKS_DEP[Schedule II<br/>SLM / WDV]
    TAX -->|Tax depreciation| IT_DEP[Section 32<br/>Block WDV @ IT Rates]
    TAX -->|GST on sale| GST[Charge GST +<br/>ITC Reversal Check]

    BOOKS_DEP --> DONE([Audit-Ready<br/>Asset Register])
    IT_DEP --> DONE
    GST --> DONE

    style START fill:#1a1a2e,color:#fff,stroke:#1a1a2e
    style DONE fill:#1a1a2e,color:#fff,stroke:#1a1a2e
    style ACTIVATE fill:#2d6a4f,color:#fff,stroke:#2d6a4f
    style FULLY_DEP fill:#e76f51,color:#fff,stroke:#e76f51
    style SELL fill:#264653,color:#fff,stroke:#264653
    style WRITEOFF fill:#9a031e,color:#fff,stroke:#9a031e

Disposing of an Asset

When you sell a fixed asset:

1. Create an invoice for the sale proceeds
2. Link the invoice to the asset in the Fixed Assets module
3. Zoho Books automatically computes the gain or loss (sale proceeds minus carrying amount)
4. The appropriate journal entry is created

For write-offs (scrapping with no proceeds), the system writes off the remaining net book value as a loss.

Reports Available

These reports are filterable by date range, asset type, status, and valuation type — making them audit-ready.

Accounting Standards: What You Need to Know

Companies Act 2013 — Schedule II (India)

For Indian companies, Schedule II prescribes useful lives (not rates) for computing book depreciation. Residual value must not exceed 5% of the original cost. Here are the key useful lives you should configure in Zoho Books:

Important: Zoho Books does not pre-populate these useful lives. You must manually configure them in your Asset Types based on Schedule II.

Ind AS 16 / AS 10 — Recognition and Measurement

Under Indian Accounting Standards, a fixed asset is recognised when:

1. Future economic benefits from the asset are probable
2. The cost can be measured reliably

The cost includes:

• Purchase price (net of discounts and rebates)
• Import duties and non-refundable taxes
• Directly attributable costs (installation, site preparation, testing)

Excluded from cost: Administrative overheads, training costs, and abnormal waste.

Income Tax Act — Tax Depreciation Rates

For tax purposes under Section 32, depreciation is computed on the Written Down Value of each block of assets — not individual assets. The key rates:

180-day rule: Assets used for less than 180 days in the year of acquisition get only 50% depreciation that year.

Critical Gaps to Be Aware Of

While the module is a significant step forward, Indian businesses should be aware of these limitations:

1. No Dual Depreciation Tracking

Indian companies must maintain two separate depreciation schedules:

• Book depreciation — per Companies Act Schedule II (SLM or WDV, per individual asset)
• Tax depreciation — per Income Tax Act Section 32 (WDV only, per block of assets)

Zoho Books’ Fixed Assets module runs only one depreciation schedule per asset. There is no native way to track book and tax depreciation simultaneously. You will need to maintain a parallel computation — either in a spreadsheet, a custom Zoho Creator app, or through manual journal entries for tax depreciation adjustments.

2. No Schedule II Presets

Useful life values must be manually entered for each asset type. There is no built-in library of Indian asset classes with pre-populated Schedule II rates. This means your accountant needs to cross-reference Schedule II and configure each asset type correctly.

3. No Component Accounting

Ind AS 16 requires componentisation — if a significant part of an asset has a different useful life, it must be depreciated separately. For example, a building’s structure (60 years), roof (15–20 years), and HVAC system (10–15 years) should be tracked as separate components.

Zoho Books treats each asset as a single unit. Component-level depreciation is not supported. Ind AS companies would need to create separate asset entries for each component.

4. No Shift-Based Depreciation

Companies Act Schedule II allows for extra depreciation when assets are used on double shift (50% extra) or triple shift (100% extra). This is not available in the module.

5. No Asset Revaluation

IFRS and Ind AS 16 permit the revaluation model where assets are carried at fair value. Zoho Books only supports the cost model.

6. Limited Depreciation Methods for India Edition

The 150% and 200% Declining Balance methods are available only in the US and Global editions — not confirmed for the India edition.

Best Practices for Getting It Right

1. Configure Asset Types Before Recording Assets

Set up all your asset types with correct Schedule II useful lives and residual values (5% of cost) before you start entering assets. This prevents inconsistent depreciation settings.

2. Use Bills to Create Assets

Whenever you purchase a fixed asset, record it as a bill with the line item coded to a Fixed Asset account. This creates the asset automatically and maintains a clear audit trail from purchase to capitalisation.

3. Maintain a Parallel Tax Depreciation Schedule

Until Zoho Books supports dual depreciation, keep a separate tax depreciation computation — ideally linked to your block of assets under the Income Tax Act. This is essential for:

• Income tax return filing
• Deferred tax computation (Ind AS 12 / AS 22)
• Tax audit (Section 44AB)

4. Set Up Physical Verification Procedures

The Companies Act requires proper books of accounts. Schedule annual physical verification of all fixed assets:

1. Extract the Fixed Asset Register from Zoho Books
2. Physically verify each asset against the register
3. Reconcile — flag missing, unrecorded, or damaged assets
4. Post write-off entries for assets no longer in use

5. Use Asset Numbering Conventions

Adopt a consistent tagging system:

[Category]-[Location]-[Sequential Number]
Example: IT-HO-0042 (IT Equipment, Head Office, #42)
         VM-MH-0015 (Vehicle, Maharashtra, #15)
         FF-F1-0103 (Furniture, Factory 1, #103)

Record this in the asset’s serial number or custom fields for easy physical identification.

6. Review Depreciation Settings Annually

Ind AS 16 requires annual review of useful life, residual value, and depreciation method. At each year-end:

• Check if any asset’s useful life needs revision
• Verify residual values are still realistic
• Confirm the depreciation method still reflects the pattern of economic benefit consumption
• Document the basis for any changes (treated as prospective accounting estimate changes)

Who Should Use This Module?

What This Replaces

Frequently Asked Questions

Can I import existing assets into Zoho Books?

Yes. Zoho Books supports bulk import of assets with field mapping. Prepare a CSV with asset name, category, purchase date, purchase price, current value, salvage value, and depreciation settings, then import via the Fixed Assets module. If you need help with the migration process, reach out to our team for guidance.

Does Zoho Books calculate depreciation for prior periods?

Yes. When you mark an asset as Active, the system retroactively creates all depreciation journal entries from the asset’s start date to the current date.

Can I change the depreciation method after an asset is active?

You can modify depreciation settings on an active asset, but you should carefully review the impact on prior and future journal entries. Best practice: make changes at the beginning of a financial year.

What happens when I sell an asset?

Create an invoice for the sale proceeds and link it to the asset. Zoho Books calculates the gain or loss (proceeds minus carrying amount) and creates the appropriate journal entry. The asset status changes to “Sold.”

Is GST applicable when I sell a fixed asset?

Yes. Sale of fixed assets is taxable under GST. If the asset was purchased less than 5 years ago, you may also need to reverse a portion of the Input Tax Credit claimed at the time of purchase.

Next Steps

The Fixed Assets module in Zoho Books is a practical, well-integrated solution for businesses that need basic asset lifecycle management within their accounting system. For most Indian SMEs, it covers the core requirement — automatic depreciation and an audit-ready register.

The gaps around dual depreciation, Schedule II presets, and component accounting are real, but manageable with proper configuration and parallel processes.

If your business also tracks project profitability in Zoho Books, the Fixed Assets module complements that workflow by giving you visibility into capital expenditures alongside operational costs. And if you operate across multiple regions, make sure you understand how your Zoho datacentre choice affects where your financial data is stored.

Explore our blog for more guides on getting the most out of Zoho Books and the broader Zoho ecosystem.

If you are setting up Zoho Books for the first time or migrating from spreadsheets, our team can configure your asset types, chart of accounts, and depreciation settings to align with the Companies Act and your specific industry requirements.