Presumptive Taxation for Goods Carriages — Section 44AE
# Presumptive Taxation for Goods Carriages — Section 44AE
Section 44AE provides a presumptive scheme for the business of plying, hiring, or leasing goods carriages.
## Who is eligible?
Eligible assessee:Any assessee (resident or non-resident, any status) engaged in the business of plying, hiring, or leasing goods carriages, who owns NOT more than 10 goods carriages at any time during the previous year.
## Presumptive income (per vehicle)
Type of vehicle
Deemed income
Heavy goods vehicle
₹1,000 per ton of gross vehicle weight (or unladen weight, as applicable) per month or part of a month the vehicle is owned
Other than heavy goods vehicle
₹7,500 per month or part of a month the vehicle is owned
The assessee may declare a higher amount than the presumptive figure.
## Definitions (for 44AE)
Heavy goods vehicle: any goods carriage with a gross vehicle weight exceeding 12,000 kg.
Gross vehicle weight: total weight of the vehicle and load, as certified/registered by the authority and permissible for that vehicle.
Unladen weight: weight of the vehicle/trailer including all equipment used with it, excluding the driver or attendant; includes the heaviest alternative body/part where multiple bodies are used.
## Distinct features versus 44AD/44ADA
Interest and remuneration to partners IS allowed as a deduction, subject to the limits in Section 40(b) (this is the only presumptive section that allows it).
Advance tax: All 4 instalments of advance tax apply (unlike the single instalment under 44AD/44ADA).
If income is declared lower than presumptive, books and audit become mandatory where income exceeds the basic exemption limit.
Worked example
### Example 1
Heavy goods vehicle. A transporter owns one heavy goods vehicle with a gross vehicle weight of 15,000 kg (15 tons) for the full 12 months. Presumptive income = 15 tons × ₹1,000 × 12 months = ₹1,80,000 for that vehicle.
### Example 2
Part-month rule with a light vehicle. A light goods vehicle (≤12,000 kg) is owned from 10th June to 31st March. June counts as a full month (part of a month = full month). That is 10 months. Presumptive income = ₹7,500 × 10 = ₹75,000.
### Example 3
Partner remuneration deduction. A firm owning 6 goods carriages computes presumptive income of ₹9,00,000 under 44AE. Unlike 44AD/44ADA, it may further deduct interest and remuneration paid to partners (within Section 40(b) limits) — say ₹2,00,000 — leaving taxable business income of ₹7,00,000.
⚠️ Common exam mistakes
Applying 44AE where the assessee owns MORE than 10 goods carriages at any time during the year — eligibility is lost entirely.
Forgetting the 'part of a month = full month' rule, which can understate the months of ownership.
Using the ₹7,500 flat rate for heavy goods vehicles — heavy vehicles (>12,000 kg) are taxed at ₹1,000 per ton per month.
Denying the partner interest/remuneration deduction — 44AE is the ONE presumptive section that allows it (subject to 40(b)).
Assuming only one advance-tax instalment applies — under 44AE all four instalments apply.
Bare-Act text Section 44AE · Income-tax Act, 1961 · click to expand
Section 44AE: In the case of an assessee who owns not more than ten goods carriages at any time during the previous year and is engaged in the business of plying, hiring or leasing such goods carriages, the income shall be deemed to be ₹1,000 per ton of gross vehicle weight (or unladen weight) per month or part of a month for each heavy goods vehicle, and ₹7,500 per month or part of a month for each goods carriage other than a heavy goods vehicle, during which the vehicle is owned by the assessee. The deduction under section 40(b) for interest and remuneration to partners is allowable from the income so computed.