Important Points to be considered in Presumptive Taxation Scheme under Section 44AE

1. Business of Assessee: Assessee engaged in the business of plying, hiring or leasing such goods carriages can opt for section 44AE.
2. Number of Goods Carriage: Assessee who owns not more than ten goods carriages at any time during the previous year only can opt for this scheme.
3. Assessee: Individual, HUF, firm, company, etc., who are engaged in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year.
4. Audit of Accounts: Person opting for section 44AE would not be required to get the books of accounts audited even if turnover exceeds the limit of Rs.1 Cr or 2 Cr. The tax audit Limit is only applied on number of vehicle, so gross receipts may even exceed audit limits, still if opt for 44AE then no need for audit.
5. Ownership vs Usage: Section 44AE operates on the basis of “ownership” and not on the basis of “usage”.

The meaning of ownership period during which the goods vehicle is owned by the assessee, in the previous year. Part of the month would be considered as a full month. Thus even if any vehicle is idle/ not being used or sent on repairs–income shall be deemed earned.

6. Expenses Allowed: The presumptive income computed above is the final income and no further expenses will be allowed or disallowed. Separate deduction towards other business expenses like salary, depreciation etc. will not admissible. Written down value of any asset used in such business shall be calculated as if depreciation u/s 32 is claimed and has been actually allowed. However, taxpayers can claim deduction under chapter VI-A like deduction u/s 80C, 80D etc. No disallowance can be made u/s 40, 40A, 43B etc. for the taxpayers who have opted section 44AE.

Where the assessee is a partnership firm, the remuneration & interest on capital to the partners can further be claimed as deduction subject to conditions & limit specified u/s 40(b).

7. Calculation of Presumtive Income:

A. For heavy goods vehicle:  income shall be an amount equal to Rs. 1,000/- 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.

B. For other than heavy goods vehicle: Income shall be an amount equal to Rs.7,500/- 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.

8. Meaning of Heavy Goods Vehicle U/s 44AE: The definition of “heavy goods vehicle” as given in explanation to section 44AE is as under: the expression “heavy goods vehicle” means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms.