The scheme of section 44AE is designed to give relief to small taxpayers engaged in the business of plying, hiring or leasing of goods carriages.

Eligible taxpayer and eligible business for the purpose of the presumptive taxation scheme of section 44AE

  1. Every person (i.e., an individual, HUF, firm, company, etc) AND
  2. Engaged in the business of plying, hiring or leasing of goods carriages AND
  3. who does not own more than 10 goods vehicles at any time during the year.

How is Income calculated?

  • Income will be computed on an estimated basis @ Rs. 7,500 per goods vehicle per month or part thereof during which the goods vehicle is owned by the taxpayer during the year. Part of the month would be considered as full month.
  • If the actual income is higher than the presumptive rate, i.e., higher than Rs. 7,500, then such higher income can be declared.
  • No further expenses will be allowed or disallowed.
  • However, if the taxpayer is a partnership firm which is opting for the presumptive taxation scheme, further deduction can be claimed on account of remuneration and interest paid to partners (computed as per the Income-tax Act).
  • Separate deduction on account of depreciation is not available. However, the written down value of any asset used in such business shall be calculated as if depreciation as per section 32 is claimed and has been actually allowed.
  • He is not required to maintain the books of account as provided for u/s 44AA in respect of business covered under the presumptive taxation scheme of section 44AE.
  • He will be liable to pay advance tax.
  • A person can declare his income at lower rate (i.e., at less than Rs. 7,500 per goods vehicle per month). However, if he does so, then he is required to maintain the books of account u/s 44AA and has to get his accounts audited u/s 44AB.
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