In a move to improve demand for commercial vehicles, the government today extended the time period for availing higher depreciation benefit of 50 per cent on commercial vehicles by six months, ie, up to end-September.

''The benefit of enhanced depreciation on commercial vehicles has been extended up to 30 September 2009,'' the Central Board of Direct Taxes (CBDT) said in a statement.

Commercial vehicles purchased on or after 1 January 2009 and put to use before 1 October will now be eligible for depreciation at the rate of 50 per cent. Earlier, this benefit was available till 31 March 2009.

The tax benefit, announced as part of the second fiscal stimulus on 2 January, had expired on 31 March.

The government allowed higher depreciation benefit for commercial vehicles after sales dipped following the impact of global financial meltdown.

Under accelerated depreciation allowed for commercial vehicles, the depreciation taken each year is higher during the earlier years of the life of an asset, allowing the buyer to claim a higher tax benefit.

The government is offering this incentive to boost demand in the automobile sector, which has been somewhat hit by the global recession.