Income-tax Act, 1961 | Presumptive taxation | Goods transport

Section 44AE of Income Tax Act: Presumptive Tax for Goods Carriages

Section 44AE provides a simplified method for computing taxable profits from the business of plying, hiring or leasing goods carriages. Instead of calculating every operating expense, eligible owners compute income vehicle by vehicle using prescribed monthly amounts.

Tax-year note: This page explains Section 44AE of the Income-tax Act, 1961 for years governed by that Act. The Income-tax Act, 2025 applies from 1 April 2026; its corresponding presumptive-tax provisions appear in Section 58. Check the applicable tax year and any subsequent amendments before filing.

Who is eligible under Section 44AE?

The scheme is available to an assessee engaged in the business of plying, hiring or leasing goods carriages who owns no more than ten goods carriages at any time during the previous year. The test is applied at every point in the year, not just on the last day. The provision is not restricted to resident individuals: firms, companies and other persons may also qualify if its conditions are met.

Vehicles acquired or possessed under hire-purchase or instalment arrangements are deemed owned for this purpose. Passenger vehicles that are not goods carriages are not covered merely because they are commercially operated.

Presumptive income rates under Section 44AE(2)

Goods carriage category	Presumptive taxable profit
Heavy goods vehicle (gross vehicle weight exceeding 12,000 kg)	Rs. 1,000 per ton of gross vehicle weight or unladen weight, as applicable, per month or part of a month of ownership
Other goods carriage	Rs. 7,500 per month or part of a month of ownership

For each vehicle, use the prescribed amount or the amount claimed to have actually been earned, whichever is higher. A fraction of a month counts as a full month. Apply the relevant statutory weight measure rather than assuming every vehicle uses its payload capacity.

Practical calculation examples

Example 1: One smaller goods carriage

A taxpayer owns a non-heavy goods carriage for nine months (including any part-month). Presumptive income = 9 x Rs. 7,500 = Rs. 67,500. If the taxpayer claims actual earnings of Rs. 85,000 from that vehicle, Rs. 85,000 is used instead.

Example 2: Heavy goods vehicle

A qualifying heavy goods vehicle has a relevant gross vehicle weight of 16 tons and is owned for seven months. Presumptive income = 16 x Rs. 1,000 x 7 = Rs. 1,12,000, unless higher actual profits are claimed. Ownership for even part of an additional month would count that month.

Example 3: Mixed fleet

One 14-ton heavy goods vehicle is owned for 12 months (Rs. 1,68,000); two other goods carriages are each owned for 12 months (2 x Rs. 90,000). Total presumptive income = Rs. 3,48,000, assuming no higher actual profits are claimed.

Section 44AE explained subsection by subsection

Subsection (1): Scope and ownership limit

Creates a special computation method for a qualifying goods-carriage business and requires that the assessee never own more than ten goods carriages at any time during the previous year.

Subsection (2): Vehicle-wise deemed profits

Sets the monthly rates for heavy and other goods carriages. Income is aggregated across all qualifying carriages.

Subsection (3): Operating deductions

Deductions under Sections 30 to 38 are treated as already allowed. Accordingly, normal separate deductions for fuel, repairs, insurance and depreciation are not claimed again. A firm may deduct eligible partner salary and interest, subject to the applicable conditions and limits in Section 40(b).

Subsection (4): Written-down value

Depreciation is deemed to have been allowed when determining the written-down value of assets, even though no separate depreciation deduction is claimed under this scheme.

Subsection (5): Books and audit relief

Sections 44AA and 44AB do not apply insofar as they relate to the qualifying goods-carriage business where Section 44AE applies. The receipts or income of that business are excluded when computing the limits under those provisions. Other businesses may have separate obligations.

Subsection (6): Historical assessment rule

The subsection addresses lower-income claims for assessment years commencing on or before 1 April 1997. It is a historical provision, not the current procedure for a new lower-profit claim.

Subsection (7): Claiming lower profits

An assessee seeking to establish income below the presumptive amounts must maintain books as required by Section 44AA(2), get the accounts audited and furnish the report as required under Section 44AB.

Important legal definitions

Goods carriage: A motor vehicle constructed or adapted for use solely for the carriage of goods, or a motor vehicle not so constructed or adapted when used for carrying goods, as defined in Section 2 of the Motor Vehicles Act, 1988.
Gross vehicle weight: The total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle.
Unladen weight: The weight of a vehicle or trailer including equipment ordinarily used with it when working, excluding the weight of the driver or attendant and, where alternative parts are used, subject to the statutory definition.
Heavy goods vehicle: For Section 44AE, a goods carriage with gross vehicle weight exceeding 12,000 kilograms. A vehicle at exactly 12,000 kilograms does not meet the 'exceeds' test.
Previous year: The financial year relevant to assessment under the Income-tax Act, 1961.

Section 44AE compared with Section 44AD

Section 44AE is a vehicle-based presumptive scheme for goods-carriage operators; Section 44AD is a turnover-based presumptive scheme for specified eligible businesses. A goods-carriage business covered by Section 44AE is not simply taxed at the 6% or 8% rates under Section 44AD.

Recordkeeping and filing checklist

Maintain a register of each goods carriage and its registration number.
Record the date each vehicle was acquired, disposed of or held on hire purchase.
Keep registration certificates showing gross vehicle weight or unladen weight.
Calculate the number of months or part-months each vehicle was owned.
Track the maximum number of vehicles owned at any time in the year.
Check whether higher actual profits are being claimed or lower-profit audit rules apply.
Confirm the appropriate income-tax return and any other statutory obligations for the tax year.

Frequently asked questions

Who can use Section 44AE?

Any class of taxpayer carrying on a business of plying, hiring or leasing goods carriages, provided not more than ten goods carriages are owned at any time during the previous year.

How is income calculated for a heavy goods vehicle?

The presumptive amount is Rs. 1,000 per ton of gross vehicle weight or unladen weight, as applicable, for each month or part of a month of ownership, or the higher actual income claimed.

How is income calculated for other goods carriages?

The presumptive amount is Rs. 7,500 per month or part of a month per carriage, or the higher actual income claimed.

Is a truck acquired on hire purchase counted as owned?

Yes. A goods carriage possessed under hire purchase or instalment arrangements is treated as owned for this provision, even if instalments remain unpaid.

What happens if lower profits are declared?

The taxpayer must maintain the prescribed books and obtain and furnish a tax audit report under Sections 44AA and 44AB, as applicable under Section 44AE(7).

Official statutory and departmental references

This is a general educational guide. Rates and obligations should be confirmed against the law applicable to the relevant tax year, including any notified changes.

Original statutory extract and amendment history

Read the original page's statutory text and historical notes

The text below is preserved from the earlier page for reference. It may contain formatting or transcription errors and should not be treated as an authoritative consolidated statute.

1(1) Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, who owns not more than ten goods carriages 2 at any time during the previous year and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head Profits and gains of business or profession shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of sub-section (2).

3 (2) For the purposes of sub-section (1), the profits and gains from each goods carriage,

(i) being a heavy goods vehicle, shall be an amount equal to one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher;

(ii) other than heavy goods vehicle, shall be an amount equal to seven thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such goods carriage, whichever is higher.

(3) Any deduction allowable under the provisions of sections 30 to 38shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed:

4 Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

(4) The written down value of any asset used for the purpose of the business referred to in sub-section (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(5) The provisions of sections 44AA and 44ABshall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded.

5 (6) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-sections (1) and (2), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143.

6 (7) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-sections (1) and (2), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB.

Explanation. For the purposes of this section,
7 (a) the expressions goods carriage, gross vehicle weight and unladen weight shall have the respective meanings assigned to them in section 2 of the Motor Vehicles Act, 1988;

(aa) the expression heavy goods vehicle means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;

(b) anassessee, who is in possession of a goods carriage, whether taken on hire purchase or on instalments and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.
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1. Ins. by Act 32 of 1994, s. 16 (w.e.f. 1-4-1994).
2. Ins. by Act 32 of 2003, s. 24 (w.e.f. 1-4-2004).
3. Subs. by Act 13 of 2018, s. 16, for sub-section (2) (w.e.f. 1-4-2019). Earlier it was substituted by Act 25 of 2014, s. 16 (w.e.f. 1-4-2015).
4. Ins. by Act 26 of 1997, s. 13 (w.e.f. 1-4-1994).
5. Ins. by Act 11 of 1999, s. 7 (w.e.f. 1-4-1997).
6. Ins. by Act 27 of 1999, s. 30 (w.e.f. 1-4-1998).
7. Subs. by Act 13 of 2018, s. 16, for clause (a) (w.e.f. 1-4-2019) which was earlier substituted by Act 25 of 2014, s. 16 (w.e.f. 1-4-2015).