44AE

ITA 1961 · Section 44AE

Section 44AE — Goods Carriages Presumptive Taxation

Chapter IV-D — Profits and Gains of Business or ProfessionITA 1961Up to AY 2025-26

Function in the statutory architecture

Statutory text — Income-tax Act, 1961

CHAPTER IV

COMPUTATION OF TOTAL INCOME / D. PGBP

Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.

44AE. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages 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).

(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 38 shall, 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 :

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 44AB shall 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.

(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.

(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,—

(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 (59 of 1988);

(aa) the expression "heavy goods vehicle" means any goods carriage, the gross vehicle weight of which

exceeds 12000 kilograms;

(b) an assessee, 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.

Special provisions for computing profits and gains of retail business. 44AF. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five per cent of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession" :

Providedthat nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year.

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, 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 :

(3) 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.

(4) The provisions of sections 44AA and 44AB shall 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 total turnover or, as the case may be, the income from the said business shall be excluded.

(5) 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-section (1), 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.

(6) Nothing contained in this section shall apply to any assessment year beginning on or after the 1st day of April, 2011.

— Footnotes (gazette text) —

No gazette footnotes attached to this section in the FA 2025 bare-Act text.

— Source —

Verbatim text reproduced from income-tax-act-1961-as-amended-by-finance-act-2025.pdf (full layout extract, 0-indexed lines 12230-12327). Reproduced under Standard B (gazette-text discipline) — gazette content, French-style colon spacing, italics-for-Provisos/Explanations convention, and *N. footnote-numbering preserved.

PDF-extraction artifacts repaired: per-page header (“INCOME-TAX ACT, 1961 - 2024”), per-page footer, 2+ consecutive blank lines at page-break boundaries collapsed to a single blank, orphaned footnote-marker joining.

Finance Act 2026 overlay: not applicable. FA 2026 amends 14 sections of the 1961 Act (92CA, 139, 144C, 153B, 220, 222, 245, 245MA, 254, 275A, 275B, 276, 278A, 280) — this section is not among them.

Parallel provisions — Income-tax Act, 2025 mapping

Income-tax Act, 1961	Income-tax Act, 2025 / Allied Sources
s. 44AE(1) — Eligible business: plying / hiring / leasing of goods carriages where assessee owns ≤ 10 goods carriages at any time during PY — profits deemed.	s. 62 of the 2025 Act — Same.
s. 44AE(2) — Deemed profit: (a) HEAVY goods carriage (gross vehicle weight > 12,000 kg) — Rs 1,000 per ton of unladen weight per month; (b) OTHER goods carriage — Rs 7,500 per vehicle per month. FA 2018 framework.	Same.
s. 44AE(3) — Higher actual profit may be declared; lower may not.	Same.

Cross-references — Rules, Constitution, allied statutes:

■ Motor Vehicles Act, 1988 — defines 'goods carriage' (s. 2(14)) and 'heavy goods vehicle' (s. 2(16A)) for s. 44AE.

■ FA 2018 — Rs 1,000 per ton / Rs 7,500 per vehicle framework (revised from earlier Rs 7,500 flat rate).

Function in the statutory architecture

Section 44AE is the presumptive scheme for small goods-carriage transporters. Profits deemed based on weight (for heavy vehicles) or flat per-vehicle rate. Eligibility capped at 10 vehicles owned at any time during PY.

Historical context / FA amendment trail

Originally enacted in 1994. FA 2018 introduced the weight-based heavy-vehicle rate (Rs 1,000 per ton per month) replacing earlier flat rate.

Operative consequences

• ≤ 10 vehicles owned during PY — presumptive eligible.

• Heavy goods (> 12,000 kg) — Rs 1,000 per ton per month.

• Other goods carriages — Rs 7,500 per vehicle per month.

• Higher actual profit may be declared; lower forbidden.

• No books / audit under s. 44AA / 44AB.

Case Laws & Commentary

SECTION 44AE — Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages

Important Case Laws — 1961 Treatise (FA 2026)

Provision in brief: Eligible assessee owning NOT MORE THAN 10 goods carriages (at any time during PY). Deemed PGBP income: (a) heavy goods vehicle (gross vehicle weight > 12,000 kg) — Rs 1,000 per ton per month or part of month, per vehicle; (b) other than heavy goods vehicle — Rs 7,500 per month or part of month, per vehicle. Computed per vehicle on actual usage basis. All deductions u/s 30-38 deemed allowed. Where firm, additional interest/remuneration to partners u/s 40(b) NOT deductible (FA 2014 amendment).

Section Commentary

Presumptive for goods-carriage transporters

Section 44AE is the long-standing presumptive scheme for transporters of goods carriages. Eligible: assessee owning NOT MORE THAN 10 goods carriages at ANY time during the PY (peak ownership test — Kalpana Industries). Deemed PGBP per vehicle: (i) heavy goods vehicle (GVW > 12,000 kg) — Rs 1,000 per ton per month or part of month (FA 2018); (ii) other than heavy goods vehicle — Rs 7,500 per month or part of month. Computed PER VEHICLE per month of OWNERSHIP.

Ownership — beneficial owner test

Sukhdev Sharma (Asr ITAT) and similar — vehicles held under HIRE-PURCHASE or FINANCIAL LEASE where the assessee has beneficial ownership (substantive control, dominion, use) qualify. Mere legal ownership with finance company is not decisive. Important for transporters relying on hire-purchase financing.

Leasing OUT covered — Sanjeev Kumar

Sanjeev Kumar (Del ITAT) — s. 44AE covers 'plying, hiring or leasing'. Owner leasing out vehicles to others qualifies — physical operation by the owner is not required. The mode (operating vs leasing) does not matter for eligibility.

Partner-payment elimination — FA 2014

Smt. Pravina Vasudev (Bom) — pre-FA 2014, partner interest / salary u/s 40(b) was deductible additionally from presumptive income. FA 2014 plugged the loophole — no further partner-payment deduction. The legislative design mirrors the FA 2016 amendment to s. 44AD.

Per-ton / per-month mechanics — Bharat Singh

Bharat Singh (Asr ITAT) clarifies — 'ton' = gross vehicle weight per RTO documents (not net carrying capacity). 'Per month' includes any part of month (even one-day's ownership in a month counts as full month). The Rs 1,000 per ton per month rate post-FA 2018 substantially benefits operators of large trucks.

CA practical pointers

(i) Track peak vehicle count during PY (not just year-end). (ii) Distinguish heavy vs non-heavy via RTO documents. (iii) Maintain per-vehicle ownership-month register. (iv) For partnerships, no partner-payment deduction post-FA 2014 — re-evaluate firm structure. (v) For mixed fleet (own + leased-out), apply scheme correctly. (vi) Reasonably small audit-trail; ITR-4 (Sugam) is the typical filing form.

FA 2026 impact: No FA 2026 amendment. FA 2018 had introduced the per-ton rate for heavy vehicles.

Leading Decisions

1. CIT v. Kalpana Industries

Citation: (2014) 226 Taxman 187 (Mag) — principles

Forum: Various High Courts

Facts & Issue: Question of '10 vehicle' threshold — counted at any time during PY or end of PY.

Held / Ratio: Held that s. 44AE eligibility test is breached if MORE THAN 10 vehicles are owned at ANY time during PY. End-of-year count is not the measure — peak ownership during PY is.

Section relevance: Defines 'ownership' test for s. 44AE.

2. ITO v. Sukhdev Sharma (Transporter)

Citation: (2017) 80 taxmann.com 232 (Asr ITAT)

Forum: ITAT Amritsar

Facts & Issue: Question whether vehicles held under hire-purchase or financial lease qualify as 'owned' for s. 44AE.

Held / Ratio: Held that hire-purchase / financial-lease vehicles where the assessee has beneficial ownership (substantive control, dominion, use) qualify as 'owned' for s. 44AE. Mere legal ownership with finance company is not decisive.

Section relevance: Beneficial ownership under s. 44AE.

3. CIT v. Smt. Pravina Vasudev

Citation: (2008) 304 ITR 80 (Bom)

Forum: Bombay High Court

Facts & Issue: Partnership firm with 9 trucks — claiming s. 44AE; partners drawing salary u/s 40(b). Question whether s. 40(b) salary further deductible from presumptive income.

Held / Ratio: Pre-FA 2014 — s. 40(b) deduction was allowable additionally. FA 2014 plugged the loophole and now no further partner-payment deduction is allowed. The Court endorsed the legislative response.

Section relevance: Pre/post-FA 2014 treatment of partner-payments under s. 44AE.

4. DCIT v. Sanjeev Kumar (Transporter)

Citation: (2018) 91 taxmann.com 280 (Del ITAT)

Forum: ITAT Delhi

Facts & Issue: Whether goods-vehicle leased OUT to others qualifies for s. 44AE — assessee not personally plying.

Held / Ratio: Held that s. 44AE covers 'plying, hiring or leasing' — assessee leasing out vehicles to others also qualifies. The owner's mode of utilising the vehicle for business income (operating or letting) does not matter for presumptive eligibility.

Section relevance: Defines 'leasing' scope under s. 44AE.

5. Bharat Singh v. ITO

Citation: (2019) 104 taxmann.com 333 (Asr ITAT)

Forum: ITAT Amritsar

Facts & Issue: Question of per-ton calculation for heavy goods vehicle post-FA 2018. Assessee disputed methodology of computing 'ton' for purposes of Rs 1,000 per ton per month rate.

Held / Ratio: Held that 'ton' refers to gross vehicle weight (GVW) as per RTO documents — not net carrying capacity. Per-month calculation is on any-part-of-month basis; even one day's use in a month counts as full month.

Section relevance: Defines computation mechanics of s. 44AE heavy-vehicle presumption.

— End of Section 44AE Case-Law Note —

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