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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:
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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):
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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.
How much of monetary gifts received by an individual or Hindu Undivided Family (HUF) is taxable?
Under Section 56(2)(x) of the Income Tax Act, 1961, monetary gifts received by an individual or Hindu Undivided Family (HUF) are taxable if they exceed a certain threshold and do not fall under specific exemptions. 1. Taxable Amount of Gifts If an individual or HUF receives monetary gifts exceedingRead more
Under Section 56(2)(x) of the Income Tax Act, 1961, monetary gifts received by an individual or Hindu Undivided Family (HUF) are taxable if they exceed a certain threshold and do not fall under specific exemptions.
1. Taxable Amount of Gifts
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See lessIf an individual or HUF receives monetary gifts exceeding ₹50,000 in a financial year from non-relatives, the entire amount becomes taxable under “Income from Other Sources”.
If the total value of gifts received in a financial year is ₹50,000 or less, they are not taxable.
When monetary gifts received by an individual or Hindu Undivided Family (HUF) is not taxable?
In India, monetary gifts received by an individual or a Hindu Undivided Family (HUF) are generally taxable under Section 56(2)(x) of the Income Tax Act, 1961. However, there are certain exceptions where such gifts are not taxable. Let’s go through these exemptions in detail. Exemptions from Tax on MRead more
In India, monetary gifts received by an individual or a Hindu Undivided Family (HUF) are generally taxable under Section 56(2)(x) of the Income Tax Act, 1961. However, there are certain exceptions where such gifts are not taxable. Let’s go through these exemptions in detail.
Exemptions from Tax on Monetary Gifts
Monetary gifts received by an individual or HUF are not taxable in the following cases:
1. Gifts from Specified Relatives (Fully Exempt)
As per Section 56(2)(x) of the Income Tax Act, gifts received from specified relatives are completely exempt from tax, regardless of the amount. The list of relatives includes:
For an Individual:
Spouse
Brother or Sister (of the individual or spouse)
Brother or Sister of either of the parents
Any lineal ascendant or descendant (of the individual or spouse)
Spouse of the above-mentioned relatives
For an HUF:
Any member of the HUF (gifts received from members are not taxable)
2. Gifts Received on Marriage (Fully Exempt)
Under Section 56(2)(x), any amount received as a gift on the occasion of marriage is completely exempt from tax. There is no upper limit for this exemption.
3. Gifts Under a Will or by Inheritance (Fully Exempt)
Any money received:
Under a will
By way of inheritance
In contemplation of the death of the payer
is not taxable under Section 56(2)(x).
4. Gifts from a Registered Trust or Institution (Exempt under Certain Conditions)
If an individual or HUF receives a gift from:
A registered charitable or religious trust (covered under Section 12A or 12AA of the Income Tax Act)
A trust created solely for the benefit of relatives of the donor
Then such gifts are not taxable, subject to conditions.
5. Gifts from Local Authorities
Any amount received from a local authority (as defined under Section 10(20) of the Income Tax Act) is fully exempt.
6. Gifts from Recognized Funds and Institutions
Money received from:
Educational institutions
Medical institutions
Recognized funds such as the Employees’ Provident Fund (EPF), Public Provident Fund (PPF), and others
is not considered taxable income.
7. Gifts Received Due to Sudden Death of a Relative (Ex-Gratia Payment)
If an individual receives an ex-gratia amount due to the death of a close relative, such an amount is not considered taxable income under the principles of personal bereavement.
See lessis gift received from relatives exempt from tax.?
Yes, under the Indian Income Tax Act, gifts received from specified relatives are exempt from tax, regardless of the amount. This exemption is outlined in Section 56(2)(x) of the Income Tax Act, 1961. The term 'relative' includes: Spouse of the individual Brother or sister of the individual BrotheRead more
Yes, under the Indian Income Tax Act, gifts received from specified relatives are exempt from tax, regardless of the amount. This exemption is outlined in Section 56(2)(x) of the Income Tax Act, 1961.
The term ‘relative’ includes:
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See lessSpouse of the individual
Brother or sister of the individual
Brother or sister of the spouse of the individual
Brother or sister of either of the parents of the individual
Any lineal ascendant or descendant of the individual
Any lineal ascendant or descendant of the spouse of the individual
Spouse of the persons referred to in points 2 to 6
Who will be considered as relative for the purpose of claiming exemption of Income Tax on Gift?
Under the provisions of Section 56(2)(vii) of the Income Tax Act, 1961, gifts received by an individual or a Hindu Undivided Family (HUF) are exempt from tax if they are received from a "relative." The Act defines "relative" for this purpose as follows: “For the purposes of this clause, ‘relative’ sRead more
Under the provisions of Section 56(2)(vii) of the Income Tax Act, 1961, gifts received by an individual or a Hindu Undivided Family (HUF) are exempt from tax if they are received from a “relative.” The Act defines “relative” for this purpose as follows:
Explanation in Simple Terms:
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See lessSpouse: Your husband or wife is always considered a relative.
Lineal Relatives:
Ascendants: Your parents, grandparents, etc.
Descendants: Your children, grandchildren, etc.
Siblings:
Your own brothers and sisters are included.
Additionally, the brothers and sisters of your spouse are also regarded as relatives.
Spouses of Relatives:
The spouse of your lineal ascendants or descendants, as well as the spouse of your siblings or the spouse’s siblings, are also treated as relatives.