Section 44AE: All About Income u/s 44AE

The IT-Department of India has maintained a special provision for people who are engaged in hiring, plying or leasing goods carriages. Any individual, business or organization who is engaged in renting out goods carriages would be deemed to have an income as follows.

The section which specifically deals with this condition is Section 44AE. This is a relaxation given by IT-Department to the transporters. In section 44AE presumptive income is calculated, tax is paid on this income i.e. actual income is ignored for the transporters opting for this scheme.

Earlier there was differentiation in heavy goods carriage and Non-heavy goods carriage for the calculation of deemed income, this has been removed from FY 2014-15 onwards. The person opting for this scheme does not need to maintain books of accounts. Now let’s take a look into the implementation and coverage of Section 44AE.

If assessee engaged in the business of plying, hiring, leasing such goods carriage then PGBP will be: –

• Heavy goods vehicle: Rs.1000 per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month.
• Other vehicle: Rs.7500 for every month or part of a month

The assessee can also declared a higher amount in his income tax return. in such case the latter will be considered to be his income.

Heavy goods vehicle: More than 12000 kg gross vehicle weight

Implementation of Section 44AE

In case of non-heavy good vehicles: The section was announced in Budget 2014 as prior to this period there were separate provisions guiding income from goods carriage. Since the introduction of this section by Mr. Arun Jaitley in 2014, tax payers can now compute their income from hiring, plying or leasing goods carriages at a flat rate of INR 7500 on per month and per carriage basis. For example, Mr. Shyam Sundar owns 5 carriages which he lets out for hire in FY 2021-22. His deemed income for the FY 2021-22 would be as follows:

Particulars	Rs.
Income per month for each carriage	7,500
No of goods vehicle	5
Monthly income from all vehicles	37,500
No. of months	12
Deemed income	4,50,000

Scope of Section 44AE:

• The taxpayer should have 10 or less carriages to his name. Individuals, businesses or organizations who have more than 10 carriages to their name will not be considered under this section.
• Irrespective of whether a vehicle is owned for a full month or not, the deemed income from hiring, plying or leasing goods carriage would be as above.
• ITR (Income Tax Return) can be filed by any entity- Individual, LLP, Partnership, HUF
• While applying the provision of Section 44AE, the provisions of Section 44AA and Section 44AB are not applicable to the taxpayer.
• Income calculated even vehicle not put to use own by assesee.
• The gross vehicle weight is considered while calculating income however if gross vehicle weight not available then we have to consider unladen weight like tractor.
• Assessees opting for presumptive taxation are not required to maintain books of account.

Thus, we find that the IT Department of India has relatively simplified the provisions of taxation for transporters. The provision not only makes the tax computation process easy for the taxpayers, but also makes it clear and defined. Section 44AE: Tax on Income @ 7500 per Vehicle for Transporters is perhaps going to make things very easy for small transport businesses.

If you have any doubts or questions in respect of Section 44AE, do feel free to ask them in the comment section. We would try to get back to you at the earliest!