Presumptive Taxation Scheme under Section 44AE

CA.R.S.KALRA | Last updated: 12 December 2020

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Section 44AE of the Income Tax Act provides a presumptive taxation scheme for individuals engaged in the business of plying, hiring, or leasing goods carriages, provided they own no more than ten such vehicles. The income is deemed based on a per-vehicle, per-month rate, with different rates for heavy goods vehicles. This scheme simplifies tax compliance by assuming certain deductions and excluding the need for detailed bookkeeping or audits for those who opt in.

Section 44AE is as follows: 44AE. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages at any time during the previous year and who is engaged in the business of plying, hiring or leasing such goods ca

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FAQ :

Section 44AE is a presumptive taxation scheme for assessees engaged in the business of plying, hiring, or leasing goods carriages, who own not more than ten such vehicles.

Income is calculated based on a prescribed rate per ton of gross vehicle weight or unladen weight for heavy goods vehicles, or a flat rate for other goods carriages, for every month or part of a month the vehicle is owned. The higher of this deemed income or actual earnings is considered.

Any assessee, including firms and companies, resident or non-resident, engaged in the business of plying, leasing, or hiring goods carriages, who owns ten or fewer goods carriages at any time during the financial year, can opt for this scheme.

Assessees opting for Section 44AE are generally not required to maintain detailed books of accounts under Section 44AA or get their accounts audited under Section 44AB, simplifying tax compliance.

Yes, an assessee can opt out and declare income lower than the presumptive income if they maintain books of accounts and get them audited, or declare a higher income computed as per standard business income rules.

The section applies to owners of goods carriages, including those acquired through hire purchase or installments where payments are still due. It does not typically apply to lessees who do not own the vehicle.