Section 44AE of the Income Tax Act 1961 – Complete details

Section 44AE of the Income Tax Act: this article is about the relaxation provided to the heavy goods carriage owner having the heavy goods transportation.

CA Yash Shah

Section 44AE of the Income Tax Act

Section 44AE of the Income Tax Act 1961: this article is about the relaxation provided to the heavy goods carriage owner having the heavy goods transportation of the goods under section 44AE of the Income Tax Act. This relaxation was given to the transportation vehicle owner because they were doing regularly strikes throughout the country for the relaxation to be given to them as they form integral part of the economy of the country.

Section 44AE and the Section 44AD are the sections where the presumptive basis to the businesses. Section 44AE deals with the dealers which has the business of plying or leasing of goods carriage where as Section 44AD deals with the presumptive of the other Businesses.

What is exactly all about Section 44AE ?

Section 44AE : Assessee covered u/s 44AE and disclosing lower profits than deemed profits, shall be required to keep and maintain such books of account u/s 44AA and get them audited and furnish a report of such audit as required u/s 44AB

A taxpayer who has trucks or any heavy vehicles not more than 10 vehicles than such taxpayer who is engaged in the business of plying, hiring, or the leasing of the heavy vehicles than such taxpayer can assume his income to be Rs 7500 per vehicle per month and file his I.T return. Earlier this amount was Rs 5000 and Rs 4500, from Budget 2014, it has been changed to the above said amount.


Must Read –Tax Audit

This relaxation is available to any assesse, i.e. he may be individual, company, HUF, Partnership Firm, etc. From the deemed income of Rs. 7500 there would not be any deductions including the depreciation of the same and would be deemed to the net income of the tax payer. In case of Partnership Firm, the expense related to the remuneration to the partners would be able to claim the deduction and so this might be beneficial to the taxpayer who is partnership firm.

The value of the assets to be shown by the taxpayer would be deemed as such as they have been allowed the deduction of the depreciation and such reduced amount would be shown under the head of the assets. This section is particularly for the owner of the goods carriage vehicles and not for the ones who are taking the vehicles on hire or taking on the lease the vehicles.

Must Read –Various Queries Related to Tax Audit

If the transport owner shows the PAN card to the person to whom he is giving services and so required to take payment from such person than such person would not require to deduct TDS as he has shown the PAN and thus not required to deduct the TDS.

In case of the transport agency, the maximum cash limit to be paid to the other person is limited to Rs 20000 in normal situations while in this situation any payment made by the transport agency to the other party than this limit would be Rs 35000 which is very much beneficial to the transport agency as there payments are mainly paid in cash only.

Must Read –Section 44AD

It is to be noted that the deduction related to the expenses would be disallowed rather the exemptions related to the deductions under section 80C to 80U would be allowed as usual only.

If the assesse want to show the lower income than the prescribed income under section than the tax payer needs to maintain such books of account irrespective of the turnover or the inventory or purchases than such tax payer would also require to get the books of the account audited.

CA Yash Shah

Yash Shah is passionate article writer in and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @, you can also catch him on facebook @ yashshah299

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