Receipt from renting heavy goods vehicle

This query is : Resolved

raghavendra b (Querist)
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19 May 2025 DEAR SIR,

ONE OF MY CLIENT RENTING HIS 12WHEELS HEAVY VEHICLE FOR SO MANY COMPANIES. HIS PREVIOUS YEAR RENTAL INCOME RS. 407006/-(154551/87900/164555) FROM ALL COMPANIES. NO ONE HAS BEEN DEDUCTED TDS.
AND ALSO HIS UPI TRANSACTION NEARLY ABOVE 40LAKHS PER ANNUM. RECEIVED FROM RENTING VEHICLES.

IN THIS CASE CAN WE DECLARE BUSINESS INCOME U/S 44AD

YOUR GUIDENCE MUCH NEEDED

THANK YOU

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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12 August 2025 Key Points to Consider:
Nature of Income:

Income from renting vehicles (especially commercial vehicles) is generally considered business income, not income from house property or other sources.

So yes, this income can be treated as business income.

Applicability of Section 44AD:

Section 44AD applies to small businesses with turnover/gross receipts up to Rs. 2 crores.

Presumptive income is 8% (6% if receipts are digital).

However, Section 44AD excludes businesses involving plying, hiring or leasing goods carriages (commercial vehicles) for which the taxpayer is required to maintain detailed books under the Motor Vehicles Act, 1988.

This means if the business is related to hiring goods carriages, Section 44AD is NOT applicable.

Section 44AE – Presumptive Taxation for Goods Carriage:

For owners of goods carriages (vehicles), Section 44AE applies.

Under 44AE, income is presumed at a flat rate per vehicle per month.

The vehicle must be registered under the Motor Vehicles Act.

This is the relevant presumptive scheme for your client.

TDS Considerations:

For renting vehicles, hirers are generally required to deduct TDS under Section 194C (Contract payments) or 194I (Rent).

Since no TDS has been deducted, the client should ensure compliance and track payments carefully.

UPI transactions above Rs. 40 lakhs:

For cash receipts exceeding Rs. 20 lakhs (Rs. 10 lakhs for professionals), cash receipts are limited under Income Tax rules.

But since receipts are through UPI (digital), it’s not cash and should be fine.

Digital transactions also help in documentation and audit trails.

Summary:
Aspect Advice
Nature of income Business income from hiring goods carriages
Applicability of Section 44AD Not applicable due to goods carriage activity
Relevant presumptive scheme Section 44AE (flat rate per vehicle/month)
TDS on rental income Hirers should deduct TDS under 194C/194I
UPI transactions Good for compliance, no issue here

Next Steps for Your Client:
Opt for Section 44AE presumptive taxation for the vehicle renting business.

Maintain necessary books as per Motor Vehicles Act requirements.

Advise hirers on their TDS obligations.

File Income Tax return accordingly.

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