Section 44AE of ITA, 1961 : Section 44Ae: Special Provision For Computing Profits And Gains Of Business Of Plying, Hiring Or Leasing Goods Carriages

Explanation using Example

Let's say Mr. Singh owns a small transport business with a fleet of 8 trucks, all of which are used for transporting goods. He is considering how to file his income tax for the year. According to Section 44AE of the Income-tax Act, 1961, since Mr. Singh owns less than ten goods carriages, he can opt for a presumptive taxation scheme.

Out of his 8 trucks, 5 are heavy goods vehicles (each with a gross vehicle weight of more than 12,000 kilograms) and 3 are other goods carriages. He calculates the income from each heavy goods vehicle at ₹1,000 per ton of the truck's weight for each month. If one truck weighs 15 tons, the presumed income from that truck would be 15 tons x ₹1,000 x 12 months = ₹180,000 for the year.

For the other 3 trucks, he can presume an income of ₹7,500 per month for each. So, for one such truck, the income would be ₹7,500 x 12 months = ₹90,000 for the year.

Mr. Singh does not need to maintain detailed books of account for this part of his business or get an audit done as per Section 44AA and 44AB, provided he opts for the presumptive income scheme. However, if Mr. Singh believes that the actual income from his trucks is lower than the presumed income, he can declare a lower income but he will then need to maintain proper books of account and get them audited.