Formula for Taxable Income: Taxable Income=50%×Gross Receipts ✅ No deductions for expenses like rent, salaries, depreciation, etc.✅ Deductions under Chapter VI-A (like 80C, 80D, 80G) are allowed. Additional Considerations ✅ No Need to Maintain Books of Account (if 50% or more is declared).✅ AdvanceRead more
Formula for Taxable Income:
Taxable Income=50%×Gross Receipts
✅ No deductions for expenses like rent, salaries, depreciation, etc. ✅ Deductions under Chapter VI-A (like 80C, 80D, 80G) are allowed.
Additional Considerations
✅ No Need to Maintain Books of Account (if 50% or more is declared). ✅ Advance Tax to be Paid in One Installment by March 15. ✅ ITR-4 (Sugam) Must Be Filed.
🚫 If declaring income below 50%, books of account must be maintained & audit may be required.
No, you cannot claim additional deductions for business expenses like rent, salary, office expenses, etc., when opting for the presumptive taxation scheme under Section 44ADA. ✅ As per Section 44ADA(2), the 50% of gross receipts deemed as income already accounts for all expenses related to the profeRead more
No, you cannot claim additional deductions for business expenses like rent, salary, office expenses, etc., when opting for the presumptive taxation scheme under Section 44ADA.
✅ As per Section 44ADA(2), the 50% of gross receipts deemed as income already accounts for all expenses related to the profession.
🚫 Depreciation under Section 32 is NOT allowed separately. ✅ However, the written-down value (WDV) of assets will be considered after reducing deemed depreciation.
What Deductions Are Still Allowed?
✅ Deductions under Chapter VI-A (like 80C, 80D, 80G, etc.) CAN be claimed.
✅ Some common deductions that can be claimed separately:
Section 80C: Investments in PPF, ELSS, Life Insurance Premium, EPF, etc. (Max ₹1.5 lakh)
Section 80D: Medical insurance premium paid for self & family (up to ₹25,000/₹50,000 for senior citizens)
Section 80E: Interest on education loan
Section 80G: Donations to charitable institutions
Section 80TTA: Interest on savings bank account (up to ₹10,000)
Yes, a taxpayer opting for the presumptive taxation scheme under Section 44ADA is required to pay advance tax. However, the payment schedule is different from regular taxpayers. Advance Tax Rule for Section 44ADA (Special Provision - Section 211(1)(b)) Entire advance tax (100%) must be paid in a sinRead more
Yes, a taxpayer opting for the presumptive taxation scheme under Section 44ADA is required to pay advance tax. However, the payment schedule is different from regular taxpayers.
Requirement to Maintain Books of Account & Audit 📌 Case 1: If Income Declared is 50% or More✅ No requirement to maintain books of account under Section 44AA.✅ No requirement for tax audit under Section 44AB. 📌 Case 2: If Income Declared is Less Than 50%❌ Books of account must be maintained as peRead more
Requirement to Maintain Books of Account & Audit
📌 Case 1: If Income Declared is 50% or More ✅ No requirement to maintain books of account under Section 44AA. ✅ No requirement for tax audit under Section 44AB.
📌 Case 2: If Income Declared is Less Than 50% ❌ Books of account must be maintained as per Section 44AA. ❌ Audit under Section 44AB is required if total income exceeds the basic exemption limit (₹2.5 lakh/₹3 lakh/₹5 lakh as per age category).
"If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:(a) Maintain books of account as per Section 44AA, and(b) Get his accounts audited under Section 44AB."
“If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to: (a) Maintain books of account as per Section 44AA, and (b) Get his accounts audited under Section 44AB.”
1. Who Can Opt for Section 44AE? As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to: ✅ Eligible Assessees: Individuals Hindu Undivided Families (HUFs) Partnership firms (excluding LLPs) Companies ✅ Eligible Business: The assessee must be engaged in the busRead more
1. Who Can Opt for Section 44AE?
As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to:
✅ Eligible Assessees:
Individuals
Hindu Undivided Families (HUFs)
Partnership firms (excluding LLPs)
Companies
✅ Eligible Business:
The assessee must be engaged in the business of plying, hiring, or leasing goods carriages.
✅ Vehicle Ownership Limit:
The taxpayer must not own more than 10 goods vehicles at any time during the previous year.
2. Who is NOT Eligible for Section 44AE?
🚫 The following categories are NOT eligible for Section 44AE:
Persons owning more than 10 goods vehicles at any time during the financial year.
Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.
Businesses other than plying, hiring, or leasing goods carriages.
Taxpayers who wish to declare lower income than the prescribed presumptive income – They must maintain books of account under Section 44AA and get an audit under Section 44AB, if applicable.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE. ✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE. ❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
1. Understanding Presumptive Taxation Under Section 44AE Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time dRead more
1. Understanding Presumptive Taxation Under Section 44AE
Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time during the financial year.
Under this scheme, the taxable income is deemed and is calculated as follows:
For Heavy Goods Vehicles (HGV) (More than 12,000 kg Gross Vehicle Weight)
₹1,000 per ton per month or part thereof
For Other Vehicles (Light/Medium Goods Vehicles)
₹7,500 per vehicle per month or part thereof
2. Can Deductions Be Claimed Under Section 44AE?
🚫 No, deductions under Sections 30 to 38, including depreciation, cannot be separately claimed.
As per Section 44AE(3):
“Any deduction under Sections 30 to 38 shall be deemed to have been already given effect to and no further deduction shall be allowed.”
Thus, no separate deductions for expenses like fuel, driver salary, repair & maintenance, insurance, or depreciation are allowed since these are assumed to be covered in the presumptive income.
✅ However, the following deductions are allowed:
(a) Salary and Interest to Partners (For Partnership Firms)
If the assessee is a partnership firm, it can claim deduction for remuneration and interest paid to partners as per Section 40(b), subject to limits.
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4): 🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme. ✅ Example:A transporter owning 6 trucks oRead more
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4):
🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme.
✅ Example: A transporter owning 6 trucks opts for Section 44AE and declares income as per the prescribed method. In this case, he is not required to maintain books of account.
Exception – When Books of Accounts are Required
A person opting out of Section 44AE and declaring a lower income than the presumptive amount must:
Maintain books of account as per Section 44AA.
Get the books audited under Section 44AB, if total income exceeds the basic exemption limit.
❌ Example: A transporter has 8 trucks but declares an income less than ₹7,500 per truck per month (for light vehicles). Since the income is lower than the presumptive scheme, he must maintain books of account and get an audit done if his total income exceeds ₹2,50,000 (or the applicable exemption limit).
Conclusion
✅ Books of account are NOT required if income is declared as per Section 44AE. ❌ Books of account are required if a lower income than prescribed is declared.
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses. 2. Applicability of Section 44AE The scheme applies to: Individuals, HUFs, FirRead more
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses.
2. Applicability of Section 44AE
The scheme applies to:
Individuals, HUFs, Firms (excluding LLPs), and Companies engaged in the business of plying, hiring, or leasing goods carriages.
Businesses owning not more than 10 goods vehicles at any time during the financial year.
3. Presumptive Income Calculation (Deemed Income)
Under Section 44AE(2):
For Heavy Goods Vehicles (HGV) (Gross Vehicle Weight >12,000 kg) → ₹1,000 per ton per month or part thereof.
For Other Vehicles → ₹7,500 per month per vehicle.
4. Advance Tax Liability Under Section 44AE
Unlike regular businesses, persons opting for Section 44AE are liable to pay advance tax in a single installment by 15th March of the financial year.
Legal Provisions
As per Section 211(1)(b) read with Section 44AE, taxpayers under presumptive taxation schemes (including Section 44AE) are not required to pay advance tax in four installments.
Instead, the entire advance tax liability must be paid on or before 15th March of the financial year.
If tax is not paid by 15th March, it can still be paid by 31st March, but delay may attract interest under Sections 234B and 234C.
How to calculate taxable income in case of a person adopting the presumptive taxation scheme of section 44ADA?
Formula for Taxable Income: Taxable Income=50%×Gross Receipts ✅ No deductions for expenses like rent, salaries, depreciation, etc.✅ Deductions under Chapter VI-A (like 80C, 80D, 80G) are allowed. Additional Considerations ✅ No Need to Maintain Books of Account (if 50% or more is declared).✅ AdvanceRead more
Formula for Taxable Income:
Taxable Income=50%×Gross Receipts
✅ No deductions for expenses like rent, salaries, depreciation, etc.
✅ Deductions under Chapter VI-A (like 80C, 80D, 80G) are allowed.
Additional Considerations
✅ No Need to Maintain Books of Account (if 50% or more is declared).
✅ Advance Tax to be Paid in One Installment by March 15.
✅ ITR-4 (Sugam) Must Be Filed.
🚫 If declaring income below 50%, books of account must be maintained & audit may be required.
See lessCan we claim further deduction of expenses when we have adopted section 44ADA?
No, you cannot claim additional deductions for business expenses like rent, salary, office expenses, etc., when opting for the presumptive taxation scheme under Section 44ADA. ✅ As per Section 44ADA(2), the 50% of gross receipts deemed as income already accounts for all expenses related to the profeRead more
No, you cannot claim additional deductions for business expenses like rent, salary, office expenses, etc., when opting for the presumptive taxation scheme under Section 44ADA.
✅ As per Section 44ADA(2), the 50% of gross receipts deemed as income already accounts for all expenses related to the profession.
🚫 Depreciation under Section 32 is NOT allowed separately.
✅ However, the written-down value (WDV) of assets will be considered after reducing deemed depreciation.
What Deductions Are Still Allowed?
✅ Deductions under Chapter VI-A (like 80C, 80D, 80G, etc.) CAN be claimed.
✅ Some common deductions that can be claimed separately:
-
-
-
-
-
See lessSection 80C: Investments in PPF, ELSS, Life Insurance Premium, EPF, etc. (Max ₹1.5 lakh)
Section 80D: Medical insurance premium paid for self & family (up to ₹25,000/₹50,000 for senior citizens)
Section 80E: Interest on education loan
Section 80G: Donations to charitable institutions
Section 80TTA: Interest on savings bank account (up to ₹10,000)
Is advance Tax is need to be paid if we have adopted the presumptive taxation scheme of section 44ADA?
Yes, a taxpayer opting for the presumptive taxation scheme under Section 44ADA is required to pay advance tax. However, the payment schedule is different from regular taxpayers. Advance Tax Rule for Section 44ADA (Special Provision - Section 211(1)(b)) Entire advance tax (100%) must be paid in a sinRead more
Yes, a taxpayer opting for the presumptive taxation scheme under Section 44ADA is required to pay advance tax. However, the payment schedule is different from regular taxpayers.
Advance Tax Rule for Section 44ADA (Special Provision – Section 211(1)(b))
-
-
See lessEntire advance tax (100%) must be paid in a single installment on or before March 15 of the financial year.
If advance tax is not paid by March 15, interest under Sections 234B & 234C will be levied.
If a person adopts the presumptive taxation scheme of section 44ADA, then he is required to maintain books of account as per section 44AA?
Requirement to Maintain Books of Account & Audit 📌 Case 1: If Income Declared is 50% or More✅ No requirement to maintain books of account under Section 44AA.✅ No requirement for tax audit under Section 44AB. 📌 Case 2: If Income Declared is Less Than 50%❌ Books of account must be maintained as peRead more
Requirement to Maintain Books of Account & Audit
📌 Case 1: If Income Declared is 50% or More
✅ No requirement to maintain books of account under Section 44AA.
✅ No requirement for tax audit under Section 44AB.
📌 Case 2: If Income Declared is Less Than 50%
See less❌ Books of account must be maintained as per Section 44AA.
❌ Audit under Section 44AB is required if total income exceeds the basic exemption limit (₹2.5 lakh/₹3 lakh/₹5 lakh as per age category).
What provision will apply if a person opt for the presumptive taxation scheme of section 44ADA and declares his income from profession at lower rate (i.e. less than50%)?
"If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:(a) Maintain books of account as per Section 44AA, and(b) Get his accounts audited under Section 44AB."
“If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:
See less(a) Maintain books of account as per Section 44AA, and
(b) Get his accounts audited under Section 44AB.”
Who is eligible for presumptive taxation scheme of section 44AE?
1. Who Can Opt for Section 44AE? As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to: ✅ Eligible Assessees: Individuals Hindu Undivided Families (HUFs) Partnership firms (excluding LLPs) Companies ✅ Eligible Business: The assessee must be engaged in the busRead more
1. Who Can Opt for Section 44AE?
As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to:
✅ Eligible Assessees:
Individuals
Hindu Undivided Families (HUFs)
Partnership firms (excluding LLPs)
Companies
✅ Eligible Business:
The assessee must be engaged in the business of plying, hiring, or leasing goods carriages.
✅ Vehicle Ownership Limit:
The taxpayer must not own more than 10 goods vehicles at any time during the previous year.
2. Who is NOT Eligible for Section 44AE?
🚫 The following categories are NOT eligible for Section 44AE:
-
-
-
-
See lessPersons owning more than 10 goods vehicles at any time during the financial year.
Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.
Businesses other than plying, hiring, or leasing goods carriages.
Taxpayers who wish to declare lower income than the prescribed presumptive income – They must maintain books of account under Section 44AA and get an audit under Section 44AB, if applicable.
Can a person who owns more than 10 goods vehicles adopt the presumptive taxation scheme of section 44AE?
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.
See less✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.
❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
Can we claim any deduction while calculating taxable business Income as per the presumptive taxation scheme of section 44AE?
1. Understanding Presumptive Taxation Under Section 44AE Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time dRead more
1. Understanding Presumptive Taxation Under Section 44AE
Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time during the financial year.
Under this scheme, the taxable income is deemed and is calculated as follows:
For Heavy Goods Vehicles (HGV) (More than 12,000 kg Gross Vehicle Weight)
₹1,000 per ton per month or part thereof
For Other Vehicles (Light/Medium Goods Vehicles)
₹7,500 per vehicle per month or part thereof
2. Can Deductions Be Claimed Under Section 44AE?
🚫 No, deductions under Sections 30 to 38, including depreciation, cannot be separately claimed.
As per Section 44AE(3):
Thus, no separate deductions for expenses like fuel, driver salary, repair & maintenance, insurance, or depreciation are allowed since these are assumed to be covered in the presumptive income.
✅ However, the following deductions are allowed:
(a) Salary and Interest to Partners (For Partnership Firms)
If the assessee is a partnership firm, it can claim deduction for remuneration and interest paid to partners as per Section 40(b), subject to limits.
(b) Deductions Under Chapter VI-A (E.g., Section 80C, 80D, 80G, etc.)
Even though business expenses are not allowed, the taxpayer can claim deductions under Chapter VI-A against gross total income. These include:
Section 80C – LIC, PPF, ELSS, etc.
Section 80D – Health insurance premiums
Section 80G – Donations to eligible charities
Section 80U – Deduction for disabled individuals
3. Exception – When Deductions Can Be Claimed
If the taxpayer declares lower income than prescribed under Section 44AE, he must:
-
-
See lessMaintain books of account as per Section 44AA
Get them audited under Section 44AB if total income exceeds the basic exemption limit
👉 In such cases, actual expenses and deductions can be claimed.
If a person adopts the presumptive taxation scheme of section 44AE, then is he required to maintain books of account as per section 44AA?
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4): 🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme. ✅ Example:A transporter owning 6 trucks oRead more
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4):
🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme.
✅ Example:
A transporter owning 6 trucks opts for Section 44AE and declares income as per the prescribed method. In this case, he is not required to maintain books of account.
Exception – When Books of Accounts are Required
A person opting out of Section 44AE and declaring a lower income than the presumptive amount must:
Maintain books of account as per Section 44AA.
Get the books audited under Section 44AB, if total income exceeds the basic exemption limit.
❌ Example:
A transporter has 8 trucks but declares an income less than ₹7,500 per truck per month (for light vehicles). Since the income is lower than the presumptive scheme, he must maintain books of account and get an audit done if his total income exceeds ₹2,50,000 (or the applicable exemption limit).
Conclusion
✅ Books of account are NOT required if income is declared as per Section 44AE.
See less❌ Books of account are required if a lower income than prescribed is declared.
What is the liability of advance tax in case of presumptive taxation scheme of section 44AE?
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses. 2. Applicability of Section 44AE The scheme applies to: Individuals, HUFs, FirRead more
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses.
2. Applicability of Section 44AE
The scheme applies to:
Individuals, HUFs, Firms (excluding LLPs), and Companies engaged in the business of plying, hiring, or leasing goods carriages.
Businesses owning not more than 10 goods vehicles at any time during the financial year.
3. Presumptive Income Calculation (Deemed Income)
Under Section 44AE(2):
-
-
-
-
-
-
See lessFor Heavy Goods Vehicles (HGV) (Gross Vehicle Weight >12,000 kg) → ₹1,000 per ton per month or part thereof.
For Other Vehicles → ₹7,500 per month per vehicle.
4. Advance Tax Liability Under Section 44AE
Unlike regular businesses, persons opting for Section 44AE are liable to pay advance tax in a single installment by 15th March of the financial year.
Legal Provisions
As per Section 211(1)(b) read with Section 44AE, taxpayers under presumptive taxation schemes (including Section 44AE) are not required to pay advance tax in four installments.
Instead, the entire advance tax liability must be paid on or before 15th March of the financial year.
If tax is not paid by 15th March, it can still be paid by 31st March, but delay may attract interest under Sections 234B and 234C.