Published 7 May 2026
Meet Karan Mansukhani, 47, who owns and operates a small fleet of 6 trucks – 3 heavy goods vehicles (HGVs) at 18 tonnes gross vehicle weight each, and 3 light goods vehicles (LGVs) under 12 tonnes – out of Mundka, Delhi. He plies them on hire / lease across NCR and Haryana, taking contracts from logistics aggregators and direct shippers.
Section 44AE – the goods-carriage presumptive scheme – gives him a turnover-free, flat-rate computation per vehicle per month. Karan’s actual receipts could be ₹40 lakh, ₹2 crore, or anywhere in between – ITR-4 doesn’t ask. The deemed income depends only on how many vehicles, of what type, owned for how many months.
This makes 44AE radically simpler than 44AD or 44ADA. No turnover declaration, no digital-vs-cash split, no audit (regardless of turnover, as long as you stay within the 10-vehicle ceiling).
This article walks through:
- Section 44AE scope, the 10-vehicle ceiling, and tonnage rules.
- The two deemed-income formulas (heavy vs light).
- Filing ITR-4 with multiple vehicles tracked per row.
- 194C TDS – and the Section 194C(6) declaration that switches it off.
1. Section 44AE eligibility
| Eligibility | Limit |
|---|---|
| Type of taxpayer | Any (Individual / HUF / Firm / LLP / Company) |
| Type of business | Plying, hiring, or leasing of goods carriages |
| Vehicle ceiling | Maximum 10 goods vehicles at any time during the year |
| Ownership | Must own the vehicles – one held on hire purchase or instalments counts as owned (lease-out is fine; pure broker / aggregator is not 44AE) |
If you owned > 10 goods vehicles at any single point in the year, 44AE is not available for the entire year – income is computed under the normal provisions and reported in ITR-3.
(Section 44AE(1): an assessee who owns not more than ten goods carriages at any time during the previous year and is engaged in plying, hiring or leasing them. Section 44AE(5) switches off Sections 44AA and 44AB for that business.)
Why a 10-vehicle ceiling? 44AE is designed for the small / family transport operator. Larger fleets are expected to be on regular accounting. If you cross 10 vehicles at any time – even for a day – the year goes to ITR-3.
Karan owns 6 vehicles all year. Eligible.
Unlike 44AD/44ADA, no turnover ceiling. You can have ₹50 cr of trip receipts and still be on 44AE if you only own 6 trucks. Section 44AE rewards lean fleet utilisation – which is why aggregators / shippers like working with 44AE-eligible operators.
2. The deemed-income formulas
| Vehicle type | Deemed income |
|---|---|
| Heavy goods vehicle (HGV) – gross vehicle weight (GVW) > 12 tonnes | ₹1,000 × tonnage × months owned |
| Light goods vehicle (LGV) – GVW ≤ 12 tonnes | ₹7,500 × number of vehicles × months owned |
Pre-Finance Act 2018, heavy vehicles also used the flat ₹7,500-per-vehicle formula. The shift to per-tonne computation was made to better reflect the higher earnings of large carriers (a 40-tonne articulated truck and an 18-tonne rigid both used to pay the same; now the 40-tonner pays more than 2× the 18-tonner).
(Section 44AE(2): ₹1,000 per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month a heavy goods vehicle is owned; ₹7,500 a month or part of a month for any other goods carriage – or the amount actually earned, if higher. A heavy goods vehicle is one whose gross vehicle weight exceeds 12,000 kg; the terms take their meaning from the Motor Vehicles Act, 1988.)
Karan’s calculation, all 6 vehicles owned for the full 12 months:
| Bucket | Computation | Amount |
|---|---|---|
| 3 HGVs × 18 tonnes each = 54 tonnes | 54 × ₹1,000 × 12 months | ₹6,48,000 |
| 3 LGVs | 3 × ₹7,500 × 12 months | ₹2,70,000 |
| Total deemed income | ₹9,18,000 |
If Karan’s actual profit is higher, he can voluntarily declare the higher figure. He can declare a lower figure only by keeping books under Section 44AA(2) and having his accounts audited under Section 44AB (Section 44AE(7)). Section 44AE has no lock-out like Section 44AD(4); see FAQ.
The “tonnage” you use is GVW, not laden weight. RC books show three weight figures: (a) Unladen Weight, (b) Gross Vehicle Weight (GVW) – and (c) sometimes Gross Combination Weight (GCW) for trailers. Section 44AE(2)(i) works on “gross vehicle weight or unladen weight, as the case may be”; GCW (truck plus trailer combined) is not one of its measures.
3. What 44AE does NOT permit
- No detailed P&L. No expense disclosure – diesel, driver salary, tyres, EMI, road-tax, fitness-certificate fees – all deemed absorbed in the formula.
- No depreciation deduction. Treated as absorbed.
- No business loss. 44AE assumes profit by design.
- No capital gains other than Section 112A long-term gains up to ₹1.25 lakh. Any other capital gain forces ITR-3.
- Multiple house properties – only ONE allowed in ITR-4.
- More than 10 vehicles at any time. Forces ITR-3 for the entire year.
What IS allowed:
- Chapter VI-A deductions (subject to regime choice).
- Salary income alongside (a salaried logistics manager who also owns trucks on the side).
- One house property.
- Other Sources within ITR-4 limits.
4. What you need
| Document | Why |
|---|---|
| Vehicle RC books | Confirm GVW per truck. |
| Date of acquisition / disposal per vehicle | Compute proportional months. |
| Form 16A (Sec 194C TDS) | A client deducts 1% under Section 194C unless the operator has given the Section 194C(6) declaration with PAN. Any TDS is claimed in Schedule TDS-2. |
| Form 26AS + AIS | Cross-check 194C entries. |
| Bank statements | Trail of trip receipts (for ITD scrutiny if asked). |
| 80C / 80D / 80CCD(1B) proofs | If old regime turns cheaper. |
| PAN, Aadhaar, bank | Standard. |
You do NOT need: full P&L, BS, audit, fixed-asset register (for ITR purposes). Keep an internal asset register for your own books and for if you exit 44AE later.
5. Step-by-step walkthrough
Step 1 – Sign in
Step 2 – Skip last-year import
Step 3 – Personal information
Step 4 – Questionnaire
- Income sources: tick Business / Profession.
- Sub-flag “Are you using presumptive scheme?”: Yes → 44AE.
Routes to ITR-4 Sugam.
Step 5 – 44AE goods-carriage section
Open the Business / Profession card. ITR-4’s 44AE row is the simplest of the presumptive forms – no turnover input, no digital / cash split:
- Business name: Karan Transport Co
- Heavy goods vehicles: 3 vehicles, each 18 tonnes GVW, owned full year (12 months each)
- Light goods vehicles: 3 vehicles, owned full year (12 months each)
BharatTax computes:
| Bucket | Computation | Amount |
|---|---|---|
| HGV income | 3 × 18 × ₹1,000 × 12 | ₹6,48,000 |
| LGV income | 3 × ₹7,500 × 12 | ₹2,70,000 |
| Total | ₹9,18,000 |
Mid-year acquisitions / disposals. If you bought a vehicle in October, only 6 months count (Oct, Nov, Dec, Jan, Feb, Mar). If you sold one in November, only 8 months count (Apr through Nov). BharatTax’s 44AE row allows per-vehicle months input. The same truck can be partial-year on both ends (e.g. bought July, sold February – 8 months).
Mixed fleet bookkeeping. If you have HGVs of different tonnage (e.g. one 18-tonner, one 25-tonner, one 40-tonner), enter each as a separate row with its own GVW. The per-tonne formula applies to each vehicle’s GVW separately.
Step 6 – Other Sources
- Savings bank interest: ₹4,500 (auto-eligible 80TTA up to ₹10K).
Step 7 – Chapter VI-A (old regime path)
- 80C (PPF ₹1,00,000 + LIC ₹30,000): ₹1,30,000
- 80D (self, age 47, not senior): ₹25,000 (paid ₹50K but the Section 80D(2)(a) cap is ₹25K for non-senior; ₹25K unused)
- 80TTA (savings interest): ₹4,500
- Total VI-A: ₹1,59,500
Step 8 – Schedule TI
| Line | New regime | Old regime |
|---|---|---|
| Income from PGBP (44AE deemed) | ₹9,18,000 | ₹9,18,000 |
| Income from Other Sources | ₹4,500 | ₹4,500 |
| Gross Total Income | ₹9,22,500 | ₹9,22,500 |
| Less: Chapter VI-A | – | ₹1,59,500 |
| Total Income (Sec 288A) | ₹9,22,500 | ₹7,63,000 |
Step 9 – Compute tax
New regime (TI ₹9,22,500, AY 2026-27 widened slabs):
| Slab | Rate | Tax |
|---|---|---|
| ₹0 - ₹4L | 0% | ₹0 |
| ₹4L - ₹8L | 5% | ₹20,000 |
| ₹8L - ₹9.225L | 10% | ₹12,250 |
| Subtotal | ₹32,250 | |
| 87A rebate (TI ≤ ₹12L) | (₹32,250) | |
| Cess 4% | ₹0 | |
| Total tax (NEW) | ₹0 |
Old regime (TI ₹7,63,000):
| Slab | Rate | Tax |
|---|---|---|
| ₹0 - ₹2.5L | 0% | ₹0 |
| ₹2.5L - ₹5L | 5% | ₹12,500 |
| ₹5L - ₹7.63L | 20% | ₹52,600 |
| Subtotal | ₹65,100 | |
| 87A rebate (TI > ₹5L) | ₹0 | |
| Cess 4% | ₹2,604 | |
| Total tax (OLD) | ₹67,700 |
(New regime: Section 115BAC(1A)(iii), with the full Section 87A rebate as total income is below ₹12 lakh. Old regime: Part I of the First Schedule to the Finance Act 2026. Totals rounded to the nearest ₹10 under Section 288B.)
| New regime | Old regime | |
|---|---|---|
| Total tax | ₹0 | ₹67,700 |
| Less: 194C TDS (assumed: a client without his Section 194C(6) declaration deducted 1% on ₹15 lakh) | ₹15,000 | ₹15,000 |
| Net result | Refund ₹15,000 | Pay ₹52,700 |
New regime saves ~₹68K. At ₹9.22L total income with the AY 2026-27 NEW basic exemption of ₹4 lakh + 87A rebate up to ₹12L, Karan pays zero tax under new regime. Old regime’s ₹1.6L of Chapter VI-A doesn’t help because TI ₹7.63L is above the ₹5L 87A threshold under old regime.
Step 10 – Confirm regime, finalise return
Karan confirms New Regime. Refund ₹15,000 (or whatever 194C TDS he had during the year) processes in 2-4 weeks.
6. Common mistakes
- Vehicle count > 10 at any time. Disqualifies 44AE for the entire year. Even one day of holding 11 vehicles between a purchase and a sale knocks you out.
- Heavy / light classification wrong. GVW > 12 tonnes is heavy. Check the RC book’s “Gross Vehicle Weight” field, not “Unladen Weight” or “Gross Combination Weight” (the latter includes trailers and is irrelevant for 44AE).
- Counting full year for vehicles bought / sold mid-year. Use actual months owned; a part of a month counts as a month (Section 44AE(2)).
- Tonnage error on HGV. Per-tonne rate × tonnage × months. A common error is using axle weight or laden weight instead of GVW. RC book → “Gross Vehicle Weight (KG)” → divide by 1,000 → tonnes.
- Claiming actual depreciation, fuel, or driver wages. Disallowed under 44AE – all expenses including depreciation are deemed absorbed in the formula. Keep them out of ITR-4.
- TDS u/s 194C not claimed. Section 194C deducts 1% from payments to an individual or HUF contractor. Under Section 194C(6) nothing is deducted where an operator owning ten or fewer goods carriages gives the payer a declaration with his PAN; without a PAN, Section 206AA raises the rate to 20%. Any TDS deducted is claimed in Schedule TDS-2 from Form 16A.
- Mixing passenger transport with goods. 44AE is goods-carriage only. Passenger transport (taxis, buses) is regular business – ITR-3 with regular books or 44AD presumptive at 6%/8%.
- Tractor / agricultural vehicle classification. “Goods carriage” takes its meaning from section 2 of the Motor Vehicles Act, 1988 (Explanation to Section 44AE); whether a particular vehicle qualifies turns on that definition.
7. Frequently asked questions
Q: I own 11 vehicles for 6 months, then sold 2 down to 9. 44AE eligible? A: No – the test is “at any time during the year”. Holding more than 10 at any point makes 44AE unavailable for the entire year; income is computed under the normal provisions and reported in ITR-3. 44AE is available again in a later year in which the fleet stays at 10 or fewer.
Q: Mixed fleet – does each vehicle’s months get pro-rated? A: Yes. BharatTax allows months input per vehicle (or per row). Calculations sum proportionally.
Q: I lease my trucks to a transport aggregator. Same? A: Yes – “leasing” is explicitly within 44AE scope. As long as you own the vehicles (don’t sub-rent third-party trucks) and the business activity is goods-carriage plying / hiring / leasing, you’re in.
Q: I run goods carriage AND passenger transport. Can I use 44AE? A: 44AE is goods-carriage only. The passenger transport leg goes under regular business income (ITR-3 with regular books, or 44AD presumptive at 6%/8% if eligible). You can have both – 44AE row for goods + 44AD row for passenger – but only on ITR-4 if all heads stay within ITR-4 limits (otherwise ITR-3).
Q: I bought a new heavy truck in February. Months for tax? A: Vehicles bought partway through the year count from the date of purchase. February acquisition = 2 months for FY 2025-26 (Feb, Mar). A part of a month counts as a full month (Section 44AE(2)).
Q: I sold one of my LGVs in mid-July for a profit. CG implications? A: A goods vehicle is a depreciable asset in a block. Under Section 50, a short-term capital gain arises only if the sale price exceeds the block’s written-down value plus additions in the year, or the block ceases to exist; otherwise the sale price reduces the block. Section 44AE(4) treats the written-down value as if depreciation had been allowed every year. If a capital gain does arise, ITR-4 cannot carry it and ITR-3 applies.
Q: There’s no explicit Sec 44AE(4) lockout like 44AD has. So I can opt out and re-enter freely? A: Correct – 44AE doesn’t have a 44AD(4)-style 5-year lockout. You can opt out (declare lower than presumptive on ITR-3) and re-enter 44AE in any later year, provided the 10-vehicle eligibility holds. Declaring a lower figure requires books under Section 44AA(2) and an audit under Section 44AB (Section 44AE(7)).
Q: Does the Sec 80TTA savings interest deduction (up to ₹10,000) affect my 44AE filing? A: No – 80TTA applies to your savings bank interest under Other Sources (₹4,500 in Karan’s case). It’s independent of 44AE.
Q: I lease my trucks to my own son’s transport firm. Same? A: Yes – 44AE doesn’t restrict the lessee’s identity. The deemed income is computed the same way.
Q: Do I need GST registration? A: GST is a separate levy under the GST laws and their rate and exemption notifications; whether it applies turns on how the transport service is supplied (for instance, whether the operator acts as a goods transport agency). It has no bearing on the 44AE computation.