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 recovery (most goods-carriage clients deduct 1%).
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 |
| Residential status | Must own the vehicles (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 – you must maintain regular books and use ITR-3.
Sec 44AE 10-vehicle ceiling and inclusion of leasing for AY 2026-27.
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).
Sec 44AE rates and tonnage formulas effective for AY 2026-27 (post FA 2018 amendment).
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 cannot declare lower without triggering audit (Sec 44AB) and dropping out of 44AE for that year (and a multi-year lockout under 44AD principles – though 44AE doesn’t have an explicit lockout like 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) – this is the one Sec 44AE uses, and © sometimes Gross Combination Weight (GCW) for trailers. Always use GVW. Picking laden weight understates; picking GCW (truck
- trailer combined) overstates.
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. CG 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) | Most contract clients deduct 1% TDS on transport payments. Recover via 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 cap is ₹25K for non-senior; ₹25K wasted) 80D self cap for sub-60 individuals
- 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) | ₹67,704 |
arithmetic against AY 2026-27 widened NEW slabs + unchanged OLD slabs.
| New regime | Old regime | |
|---|---|---|
| Total tax | ₹0 | ₹67,704 |
| Less: 194C TDS (assume client deducted 1% on say ₹15L receipts) | ₹15,000 | ₹15,000 |
| Net result | Refund ₹15,000 | Pay ₹52,704 |
TDS amount depends on Karan’s actual gross transport receipts – 1% × gross. Replace with actual from 26AS during fixture run.
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.
44AE filers in the ₹6-12L deemed-income zone almost always win with new regime + 87A. The cross-over to old regime starts only above ~₹13L total income with substantial 80C / 80D / 80CCD(1B).
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.
AY 2026-27 schema window. ITR-4 schema v1.4 for AY 2026-27 is CBDT-pending. JSON downloads show “🔒 Locked – AY 2026-27 schema pending” until release (target: May 2026).
6. Common mistakes
[VERIFY all items below.]
- 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. ITD cross-checks against RTO records – their database knows when you registered / transferred each RC.
- 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. Most transport contracts attract 1% TDS u/s 194C (transport contracts to small operators with ≤ 10 vehicles + PAN furnished have a lower rate; without PAN it bumps to 20%). Pull Form 16A from each client and add to Schedule TDS-2. Substantial refund typical.
- 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. Tractors used purely for agriculture are not “goods carriages” and fall outside 44AE. If the same tractor pulls a trailer for hire on roads, it counts.
7. Frequently asked questions
[VERIFY all answers below.]
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”. You held
10 at one point → ineligible for the entire year. Use ITR-3 with regular books for the year. Re-enter 44AE next year if you stay ≤ 10.
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). Use proportional formula. RC book registration date is the authoritative date.
Q: I sold one of my LGVs in mid-July for a profit. CG implications? A: Yes – sale of a business vehicle triggers Sec 50 short-term capital gain (block-of-assets framework). Sale price minus WDV = STCG. This forces escalation to ITR-3 – 44AE doesn’t allow capital gains on ITR-4. Plan disposals carefully or accept the ITR-3 escalation for that year.
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. Use this flexibility carefully – opting out triggers Sec 44AB audit which has its own cost.
Q: Does the ₹15K Sec 80TTA savings interest deduction 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. But ITD may test “arm’s length” if the lease rate is suspiciously low, and recompute under regular provisions. Keep market-rate leases.
Q: Do I need GST registration? A: GST applies to goods transport at 5% (with no ITC) or 12% (with full ITC) under the GTA mechanism. Registration threshold ₹20 lakh aggregate turnover (services). Independent of 44AE income-tax treatment.
Verification checklist
- [ ] All
...markers above resolved. - [ ] Confirm Sec 44AE rates: HGV ₹1,000/tonne/month; LGV ₹7,500/vehicle/month for AY 2026-27.
- [ ] Confirm 10-vehicle ceiling and “at any time during the year” interpretation.
- [ ] Confirm GVW > 12 tonnes = HGV classification cutoff.
- [ ] Confirm Sec 87A new-regime rebate (₹60K up to ₹12L) + AY 2026-27 widened NEW basic exemption (₹4L).
- [ ] Confirm 44AE absence of explicit 5-year lockout (vs 44AD(4)).
- [ ] Run fixture (
fixture.json) through BharatTax + replace approximate compute figures with exact output. - [ ] Persona uniqueness in
_PERSONAS.md(Karan Mansukhani, AAAPM5544K). - [ ] Confirm ITR-4 BP card 44AE row labels in latest BharatTax UI.
- [ ] Confirm Schedule TDS-2 entry for 194C (transport-contract TDS).