Presumptive taxation under Section 44AE

Presumptive taxation under Section 44AE

For those who are in the business of plying, leasing or hiring of trucks a scheme similar to presumptive income scheme under section 44AD is available.

Eligibility Criteria:

You should be in the business of plying, leasing or hiring goods carriages.
You should not own more than 10 goods carriages at any time during the year. Include carriages taken on hire purchase or on instalments.

You may be an individual, HUF, Company or partnership firm – scheme is allowed to all taxpayers.

Features of this scheme:

Net taxable income from a goods vehicle (including any goods carriage) will be calculated as Rs 7,500 per month for each vehicle per month or part thereof during the FY in which vehicle is owned by the assessee.

The above calculation will be irrespective of heavy goods vehicle (more than 12000 kgs) and light goods vehicle(less than or equal to 12000 kgs).

The assessee is not required to maintain books of accounts under this business

The advance tax has to be paid 100% by 15th March for such businesses.

No need to comply with the requirement of quarterly instalments due dates (June, Sep, Dec) of advance tax.

You are not allowed to deduct any business expenses against the income.
Part of a month shall be rounded off to the next month. For example, if a goods carriage is owned for 9 months and 3 days, the net income shall be calculated as if the carriage was owned for 10 months.

Deduction for Business Expenses:

No business expenses are allowed to be deducted from the net income. Depreciation is also not deductible.

However, in case of a partnership firm, a separate deduction for remuneration of partners and interest paid to partners is allowed.

This must be within the limit specified under section 40(b). Even though depreciation is not allowed as a deduction written down value (WDV) of the assets shall be considered as if depreciation has been allowed.

Can the taxpayer declare higher or lower income?

The taxpayer can voluntarily declare a higher income and pay tax on it. In case the taxpayer chooses to declare lower income than as mentioned above, he shall have to maintain books of accounts under section 44AA and get them audited.

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