Introduction-
The presumptive taxation scheme of section 44AE can be adopted by a person who is engaged in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year. The assessee has to file ITR-4 for presumptive income under section 44AE.
Eligibility under this scheme (Section 44AE)- Every person as below can adopted the scheme:
- Individual
- Hindu Undivided Family
- Firms
- Limited Liability Partnership Firm
- Company
Tax computation under this scheme (Section 44AE)-
A) Light Goods Vehicle- (Gross Weight Vehicle - less than 12 MTs)-Rs. 7,500 per vehicle, per month.
B) Heavy Goods Vehicle- (Gross Weight Vehicle - more than 12 MTs) - Income will be computed at the rate of Rs. 1,000 per ton, per vehicle, per month.
Note - Any person opting for the presumptive taxation scheme under section 44AE, he has to keep in mind the following points that-
- The presumptive income computed as per the prescribed rate is the final income and no further expenses will be allowed or disallowed. However, where the assessee is a partnership firm, the remuneration or interest paid to partners can be claimed as deduction under section 40(b). In other words, separate deduction from the above calculated presumptive income can be claimed as deduction.
- Separate deduction on account of depreciation is not available, however, the written down value of any asset used in such business shall be calculated as if depreciation as per section 32 is claimed and has been actually allowed.
- The provision of section 44AA (1) relating to maintenance of books of accounts will not apply.
- An assessee declaring his income under this scheme (section 44AE) can also claim tax benefit of Deductions under Section 80C to 80E.
- This scheme is only applicable to taxpayers who are engage in the business of leasing/plying or hiring of goods carriage and not applicable to a taxpayer who has taken such vehicle on lease.
Advance Tax under this scheme (section 44AE)-
There is no concession as regards payment of advance tax. Hence, he will be liable to pay advance tax even if he adopts the presumptive taxation scheme of section 44AE.
Note-
The taxpayer may disclose income higher than the specified under this scheme. However, taxpayer discloses income lower than the specified under this scheme he would be required to maintain the books of account as per the provisions of section 44AA and has to get his accounts audited as per section 44AB.
A) Example of Light Goods Vehicle (Gross Weight Vehicle - less than 12 MTs) - Rs. 7,500 per vehicle, per month.
Mr. Samir is engaged in the business of plying, hiring or leasing of goods carriage. Throughout the year 2018-19 he owned 6 goods vehicles (other than heavy goods vehicles). What will be his taxable income under provision of section 44AE?
Answer-
In case of vehicles, other than heavy goods vehicle, income will be computed as per section 44AE@ 7,500 per vehicle, per month, hence, his income will be computed as under:
| Particulars |
Amount (Rs.) |
| Income as per section 44AE (Other than heavy vehicle) per vehicle, per month @ 7500/- |
7,500 |
| No. of goods vehicles |
6 |
| Monthly income as per the provisions of section 44AE (Other than heavy goods vehicle) |
45,000 |
| No. of months in the year during which the vehicles were owned |
12 |
| Total income as per section 44AE |
5,40,000 |
B) Example of Heavy Goods Vehicle (Gross Weight Vehicle - more than 12 MTs) - Income will be computed at the rate of Rs. 1,000 per ton, per vehicle, per month.
Mr. Oberoi engaged in the business of plying, hiring or leasing goods carriages. He owned 6 heavy goods vehicle having gross weight of 13,000 kilograms (13 ton) during the previous year 2018-19. What will be his taxable income as per the provisions of section 44AE?
Answer-
In case of vehicles, for Heavy Goods Vehicle, income will be computed at the rate of Rs. 1,000 per ton of gross vehicle weight, per vehicle, per month or part of a month during which the heavy goods vehicle is owned. Hence, income will be computed as under:
| Particulars |
Amount (Rs.) |
| Income as per section 44AE for heavy vehicle, per vehicle, per ton, per month (13000 kilograms i.e., 13 ton)@ 1000/- |
13,000 |
| No. of heavy goods vehicle |
6 |
| Monthly income as per the provisions of section 44AE (For heavy goods vehicle) |
78,000 |
| No. of months in a year |
12 |
| Total income as per section 44AE |
9,36,000 |