Section 44AE, Section 44AD & Section 44ADA deal with Presumptive Taxation of Business. Section 44AE is applicable for Business of plying, hiring or leasing goods carriages whereas Section 44ADA is applicable for Professionals & Section 44AD is applicable for Other Businesses.

The following article deals with Section 44AE only and for Presumptive Taxation under Section 44AD, Section 44ADA kindly refer this article – Presumptive Taxation of under Section 44AD & Section 44ADA.

Provisions of Section 44AE for Transporters

A taxpayer who owns not more than 10 Goods Carriage and is engaged in the business of plying, hiring or leasing of Goods Carriage, his income would be deemed as follows:-

  1. Light Goods Vehicle (Less than 12 MT – Gross Weight Vehicle) – Rs. 7,500 per vehicle per month
  2. Heavy Goods Vehicle (More than 12 MT – Gross Weight Vehicle) – Rs. 1,000 per ton per vehicle per month (Budget 2018 Amendment, applicable from Financial Year 2018-19 onwards)

Other Provisions of Section 44AE

  1. If the vehicle is not owned for the full month but is owned for part of the month – then this period would be considered as full month.
  2. Income Tax Return for deemed income on a per vehicle basis can be filed by any class of taxpayer (i.e. Individual/ HUF/ Partnership Firm/ LLP/ Company etc)
  3. ITR 4 would be applicable for Income disclosed under this Section.
  4. From the deemed income computed under this Section, the taxpayer would not be allowed to claim any expense or depreciation or any other expense.
  5. The provisions of Section 44AA and Section 44AB shall not apply for businesses showing income under section 44AE.
  6. The written down value of any asset used for the purpose of business whose income is taxable in any of the presumptive schemes shall be calculated as if the taxpayer has claimed and has been actually allowed the deduction for depreciation as per the rates prescribed under the Income Tax Rules for each of the relevant assessment years, for which the income is estimated under presumptive income schemes sections under Income Tax Act 1961.
  7. The provisions of Section 44AE are only applicable to taxpayers who are in the business of leasing/ plying or hiring of goods carriage and are not applicable to a taxpayer who has taken such vehicle on lease. In other words, the person who has given such vehicle on lease can disclose income under this section but a person who has taken such vehicle on lease cannot disclose income under this section.
  8. The taxpayer may disclose income higher than specified under this Section. However, in case a taxpayer discloses income lower than what has been specified in this section, he would be required to comply with the provisions of Section 44AA and Section 44AB.

Other Related Provisions applicable on Transporters

  1. If the Transporter furnishes his PAN Card, No TDS is required to be deducted on the amount paid to the Transporter.
  2. Under the existing provisions of the Income-tax Act, where a taxpayer incurs any expenditure, in respect of which payment in excess of Rs 20,000 is made otherwise than by an account payee cheque or account payee bank draft, such expenditure is not allowed as a deduction. Given the special circumstances of transport operators for incurring expenditure on long haul journeys, the limit of payment to such transport operators otherwise than by an account payee cheque or account payee bank draft has been increased to Rs 35,000/- from the existing limit of Rs 20,000/-

e-Book on Presumptive Taxation

To help our readers understand this Scheme of Presumptive Taxation under Section 44AE, Section 44AD & Section 44ADA, we have also authored an e-book which explains in detail all the provisions applicable in such cases. The concepts have been explained in detail along with Summaries, Charts and 7 Illustrations.

The e-book can be purchased for Rs. 97 only from this link – e-Book on Presumptive Taxation for Transporters, Businesses and Professionals