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Section 44AE of the Income Tax Act

by Varun Advani | 11 June 2015

Section 44AE of the Income Tax Act provides for the method of estimating income from the business of plying, hiring or leasing trucks owned by a taxpayer owning not more than 10 trucks at anytime during the financial year. It is an optional scheme available for a taxpayer who does not maintaining books of accounts.

If the taxpayer opts to file his/her income tax return u/s 44 AE, no deduction from section 30 to 38 shall be available to him/her. However in case of a partnership firm, salary and interest paid to partner can be reduced from the deemed profits within the permissible limits of section 40(b) .Deemed profits under section 44 AE shall be computed as follows from assessment year 2015-16 onwards:-

While calculating the deemed profits of all types of goods carriage: INR 7,500 per month per vehicle × No. of month(s) or part of a month in the financial year during which the vehicle is owned by the assessee × Number goods carriages.

If the taxpayer would like to disclose profits lesser than what was determined above, he would have to maintain books of accounts and get the same audited by a practicing chartered accountant u/s 44 AB. Income tax returns of such taxpayers with presumptive income u/s 44 AE is liable to be filed in the ITR 4S form.




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