Leasing of trucks falls under the scope of "business", as defined in Section 2(13) and 2(28C):"Business includes trade, commerce or manufacture or any adventure in the nature of trade..." So, income from truck leasing is taxable under the head 'Profits and Gains of Business or Profession' [Section 2Read more
Leasing of trucks falls under the scope of “business”, as defined in Section 2(13) and 2(28C):”Business includes trade, commerce or manufacture or any adventure in the nature of trade…”
So, income from truck leasing is taxable under the head ‘Profits and Gains of Business or Profession’ [Section 28].
Two Methods of Computation:
1️⃣ Presumptive Taxation – Section 44AE (for small transporters)
Applicable only if the person owns ≤ 10 goods vehicles (including leased ones).
📘 Bare Act (Section 44AE):
“The income shall be deemed to be ₹1,000 per ton of gross vehicle weight (GVW) for heavy goods vehicles and ₹7,500 per month per vehicle for other goods vehicles.”
💡 Key Points:
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Applies to persons owning goods carriages, even if leased out
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Applicable only for goods vehicles, not passenger vehicles
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Income is presumed, no need to maintain books (Sec 44AA not required)
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Heavy goods vehicle = GVW > 12,000 kg
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No further deduction allowed (like depreciation, etc.)
✅ Example:
Mr. A owns 5 trucks (each <12,000 kg) and leases them.
→ Presumptive income = ₹7,500 × 5 trucks × 12 months = ₹4,50,000
This ₹4.5 lakh will be taxable under “Business Income” without further deductions.
2️⃣ Normal Taxation (Section 28 & 32) – If not opting 44AE or owning > 10 vehicles
If the assessee:
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Owns more than 10 trucks, or
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Chooses not to opt for Section 44AE,
Then normal business provisions apply.
🔹 Income = Gross Receipts – Allowable Expenses
Allowable expenses include:
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Truck maintenance & fuel
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Driver wages, RTO fees, etc.
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Depreciation under Section 32 (usually 30% for trucks on WDV basis)
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Interest on loans for trucks
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Insurance and road tax
📒 Books of accounts must be maintained as per Section 44AA
🔍 Accounts may be audited if turnover exceeds limits in Section 44AB
Which is Better?
| Criteria | Section 44AE | Normal Provision |
|---|---|---|
| Simplicity | Very easy | Complex |
| Records | No books needed | Mandatory |
| No. of trucks | ≤ 10 | > 10 |
| Actual Expenses | Not considered | Fully allowed |
| Depreciation | Not allowed separately | Allowed u/s 32 |
| Turnover-based Audit | Not applicable | Required if turnover crosses limits |
nder the Income Tax Act, 1961, a “capital asset” is broadly defined in Section 2(14). It includes property of any kind held by an assessee, whether or not connected with their business or profession. However, this definition comes with several exclusions. Key Exclusion: Stock-in-Trade Stock-in-TradeRead more
nder the Income Tax Act, 1961, a “capital asset” is broadly defined in Section 2(14). It includes property of any kind held by an assessee, whether or not connected with their business or profession. However, this definition comes with several exclusions.
Key Exclusion: Stock-in-Trade
Stock-in-Trade Is Not a Capital Asset:
Items held for the purpose of sale in the ordinary course of business—such as inventory, raw materials, or finished goods—are classified as stock-in-trade and do not fall under the definition of capital assets.
Why This Matters:
Capital gains on the sale of capital assets are taxed differently from business income. Since stock-in-trade is part of normal business inventory, any profit from its sale is treated as business income, not as capital gains.
In Summary
Defined under Section 2(14) of the Income Tax Act and includes property held for investment or personal use.
Stock-in-trade is excluded from the definition of capital assets because it is part of the inventory used in the normal course of business.
This distinction is crucial for determining the applicable tax treatment on the sale of assets. For capital assets, capital gains tax rules apply, while profits from stock-in-trade are taxed as business income.
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