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.

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.

(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:

1. Maintain books of account as per Section 44AA

2. Get them audited under Section 44AB if total income exceeds the basic exemption limit
   👉 In such cases, actual expenses and deductions can be claimed.

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:

1. Persons owning more than 10 goods vehicles at any time during the financial year.

2. Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.

3. Businesses other than plying, hiring, or leasing goods carriages.

4. 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.

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).