Presumptive Taxation for Transporters (44AE)

A transporter’s real profit depends on things that are hard to record: diesel bought on the road, cash paid to drivers and loaders, tolls, and repairs done between loads. For a small fleet owner the law replaces all of it with a fixed amount for each truck for each month it is owned. It does not look at turnover at all. The scheme turns on three questions. How many goods carriages are owned? How heavy is each one? For how many months was each one held? This guide explains who may use the scheme, how the figure is worked out, and what happens if a lower income is claimed.

Which Act governs which year

• Financial year 2025-26 (assessment year 2026-27) and earlier. The scheme is section 44AE of the Income-tax Act, 1961.
• Tax year 2026-27 onwards. The counterpart is Table serial number 2 in section 58(2) of the Income-tax Act, 2025, read with section 58(3), (5), (6), (10) and (11)(d) to (f).
• Years before 1 April 2026 continue under the 1961 Act by section 536(2).

Who may use the scheme

Section 44AE(1) applies to “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”. Column C of serial number 2 in section 58(2) uses the same words for the tax year.

Three features stand out.

• Any assessee. Unlike sections 44AD and 44ADA, the provision is not confined to residents or to individuals, HUFs and firms. A company or an LLP that meets the vehicle test is within its words.
• Ten vehicles at any time. The count is of carriages owned at any point in the year. An owner who has eleven on a single day is outside the scheme for the whole year.
• Ownership includes hire purchase. Under clause (b) of the Explanation, an assessee “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”. Section 58(11)(f) repeats this.

“Goods carriage”, “gross vehicle weight” and “unladen weight” take their meanings from section 2 of the Motor Vehicles Act, 1988, under clause (a) of the Explanation and section 58(11)(d). A heavy goods vehicle is a goods carriage whose gross vehicle weight “exceeds 12000 kilograms” (clause (aa); section 58(11)(e)).

The business of plying, hiring or leasing goods carriages is excluded from section 44AD by clause (b)(i) of its Explanation. Section 58(2), serial number 1, likewise covers “any business other than the business specified against serial number 2”. The two schemes do not overlap.

How the income is worked out

Section 44AE(2) fixes the profit from each goods carriage:

• (i) a heavy goods vehicle: “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 the amount actually earned from it, whichever is higher;
• (ii) any other goods carriage: “seven thousand five hundred rupees for every month or part of a month during which the goods carriage is owned”, or the amount actually earned, whichever is higher.

Column E of serial number 2 in section 58(2) of the 2025 Act sets the same figures: Rs 1,000 per ton of gross vehicle weight or unladen weight for each month or part of a month for a heavy goods vehicle, Rs 7,500 per goods carriage per month or part of a month for any other, “or profit claimed to have been actually earned, whichever is higher”.

The total deemed income is the sum for all carriages. A part of a month counts as a whole month, so a truck bought on 28 May counts for May.

A worked example, financial year 2025-26

An individual owns:

Vehicle	Gross vehicle weight	Months owned	Computation	Deemed income
Truck A (heavy)	16,200 kg (16.2 tons)	12	16.2 × Rs 1,000 × 12	Rs 1,94,400
Truck B (heavy)	25,000 kg (25 tons)	7 (bought 20 September)	25 × Rs 1,000 × 7	Rs 1,75,000
Light goods vehicle	3,500 kg	12	Rs 7,500 × 12	Rs 90,000
Total				Rs 4,59,400

The deemed income does not depend on the freight earned. Freight of Rs 40 lakh or Rs 80 lakh gives the same figure.

What the deemed figure covers

Under section 44AE(3), deductions under sections 30 to 38, depreciation included, are deemed already allowed. The proviso adds one exception: “where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed”, within the conditions and limits of section 40(b). Section 44AE(4) treats depreciation as allowed each year for written down value. Section 58(5) of the 2025 Act carries the partner proviso (with the limits in section 35(e)), and section 58(6) the written down value rule. Section 58(4) bars “any loss, allowance or deduction allowable under the provisions of this Act” against the computed income.

No books or audit for the scheme business

Section 44AE(5) provides that sections 44AA and 44AB “shall not apply in so far as they relate to the business referred to in sub-section (1)”. It adds that “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”. Section 58(10) of the 2025 Act does the same for sections 62 and 63.

So a transporter who also runs a shop counts only the shop’s turnover against the book-keeping and audit thresholds. The transport receipts do not count.

Claiming a lower income

Section 44AE(7) opens “Notwithstanding anything contained in the foregoing provisions of this section”. It allows a lower income to be claimed “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”. Section 44AA(2)(iii) and section 44AB© give effect to this from their side. No total income condition applies under the 1961 Act.

Under the 2025 Act, section 58(3) applies to every assessee in column C of the Table, serial number 2 included. It requires books under section 62 and audit under section 63 where a lower profit is claimed and “total income exceeds the maximum amount which is not chargeable to tax”. Section 62(2)© and serial number 2 of the Table in section 63(1) refer to an assessee in section 58(2) who has claimed income lower than the deemed profits. Section 58(10), which keeps sections 62 and 63 away from the goods carriage business, is not expressed to be subject to section 58(3). The 1961 Act resolved the same overlap with the non obstante words at the start of section 44AE(7).

There is no five-year lock for goods carriages. Section 44AD(4) and section 58(7) apply only to the business scheme.

Advance tax and the return

The single 15 March instalment in section 211(1)(b) of the 1961 Act covers only sections 44AD(1) and 44ADA(1). Section 408(2) of the 2025 Act likewise covers only section 58(2), serial numbers 1 and 3. A transporter under section 44AE therefore pays advance tax in the ordinary instalments of 15 June, 15 September, 15 December and 15 March, where the year’s tax is Rs 10,000 or more. See Advance Tax and Self-Assessment Tax.

For AY 2026-27, a transporter whose accounts are not required to be audited files by 31 August. This follows from Explanation 2 to section 139(1), as substituted by the Finance Act, 2026 from 1 March 2026. One who is audited, because a lower income is claimed, files by 31 October. For AY 2026-27 that date was extended to 21 November 2026 by CBDT Circular No. 07/2026.

What to have ready

• A vehicle list for the year. For each carriage: registration number, gross vehicle weight or unladen weight from the registration certificate, date of acquisition and date of sale or transfer. These come from the RC, purchase and sale papers and any hire purchase agreement.
• The maximum number owned on any day in the year, to test the limit of ten.
• For firms, partners’ salary and interest, within the section 40(b) limits.
• Freight receipts and TDS on them, from the AIS and Form 26AS. TDS under section 194C on freight is credited against the tax even though the income is presumptive.
• Advance tax challans, from e-Pay Tax Payment History.
• If a lower income is to be claimed, books and the audit report.

Filing

ITR-4 (Sugam) covers presumptive income under section 44AE for a resident individual, HUF or firm (other than LLP) with total income up to Rs 50 lakh, subject to the exclusions listed on the e-filing portal. Other assessees use ITR-3, ITR-5 or ITR-6 as their status requires. A step-by-step walkthrough, including the vehicle-wise schedule, is in Filing ITR-4 for a Goods Carriage Transporter under Section 44AE. The return must then be verified; see E-Verifying a Return.

What can and cannot be changed afterwards

The deemed income is mechanical. Errors are usually in the vehicle count, the weight used or the months of ownership, and can be corrected by a revised return within section 139(5), or later as described in Belated and Revised Returns and The Updated Return (ITR-U). A claim of lower income made in a revision brings in the books and audit conditions of section 44AE(7).

Summary

1. Fix the Act: section 44AE for FY 2025-26 and earlier; section 58(2), serial number 2, from tax year 2026-27.
2. Count the goods carriages owned on every day of the year, hire purchase vehicles included; more than ten on any day ends eligibility for the year.
3. For each heavy goods vehicle (gross vehicle weight above 12,000 kg), take Rs 1,000 per ton per month or part of a month owned. For each other goods carriage, take Rs 7,500 per month or part of a month.
4. A firm deducts partners’ salary and interest within section 40(b) (section 35(e) under the 2025 Act). No other deduction is allowed.
5. The scheme business is outside the books and audit provisions, and its receipts are left out of their thresholds.
6. A lower income needs books and an audit; there is no five-year lock.
7. Pay advance tax in the ordinary four instalments, file ITR-4 (or the form for the assessee’s status) by the due date, and verify.

The next guide covers who must keep books of account under section 44AA, and what they must keep.