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Transporters Income assumed to be 7500/ Month/Vehicle Under Section 44AE

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Section 44AD of Income tax act gives some benefit to small tax payers with regards to maintaining of books of account, by assuming their Income.

Read:  Presumptive Tax Payment for Individuals, HUF 

Section 44AE also deals with Presumptive taxation of transporters or as per rule,”assessee engaged in the business of plying, hiring or leasing such goods carriages”.

The Income of each vehicle is assumed Rs 7500/ Month irrespective of size of the vehicle. Earlier there was difference in assumption based on Size of the vehicle like Heavy Goods Carriage ,Non heavy goods carriage etc.

The Provision of Section 44AE Regarding Income Assumption is as follows.

[(2) For the purpose of sub-section (1), the profits and gains from each goods carriage shall be an amount equal to seven thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from the vehicle, whichever is higher.]

Conditions for availing the benefit of Section 44AE.

  • Assessee should not own more than 10 vehicle
  • The assessee cannot claim any expense, deductions if availing section 44AE except remuneration to partners & Interest paid to partners subject to a condition under section 40 clause (b)
  • The Provisions of Section 44AA & 44AB cannot applied if assessee paying tax under 44AE
  • The section is applicable for those who are engaged in the Leasing, plying or hiring of goods carrigae. Not to the person who have hired the Vehicle from him.

Can Assessee claim Lower than the Income Stated under Section 44AE?

Assessee can claim lower than the profit mentioned in section 44AE. But has to keep books of accounts as mentioned in Section 44AA and have to submit audited report as stated under section 44AB.

Comments (3)

  • if the person(Mr.A) doing his tranportation business by hiring a goods carriage vehicle from their brother(Mr. B). please suggest me whether
    1.Can Mr A( who takes goods carriage on hire and do use in business of plying of goods carriage ) opts for presumptive taxation u/s 44AD or sec 44 AE will apply?
    2. Mr.B (who give goods carriage on hire to B) should opts for sec 44AE?

  • Mr. A does not own the vehicle. His brother owns. He is customer of his brother by taking carriage on hire. Mr. B is the owner of the carriage and he only can get the benefit of sections mentioned here.

  • In case the eligible assessee under section 44AE also earning interest income under head income from other sources. how it would be included in return because in ITR 4S, there is no provision for Income under head other sources.

    Please clarify.


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