[Section 44AE] : Profit from the Business of Carriage of Goods for Truck Owners

The broad features of the Section 44AE or Scheme are :

1. Not more than 10 goods carriages –

The scheme applies to a person owning not more than 10 goods carriages at any time during the previous year.

For this purpose, 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 carriages.

2. Mode of Estimation of Income (applicable up to the assessment year 2018-19) –

The income from each goods carriage being a “heavy goods vehicle” shall be estimated at Rs. 7,500 for every month (or part of a month) during which the goods carriage is owned by the assessee.

The income from each goods carriage, other than a heavy goods vehicle shall be estimated at Rs. 7,500 for every month (or part of a month) during which the goods carriage is owned by the assessee.

In either case, the taxpayer can declare his income from trucks at a higher amount than that specified above.

For this purpose “goods carriage” means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods; and

“heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a roadroller the unladen weight of either of which exceeds 12,000 kilograms.

Example :

Aan assessee owns a commercial vehicle for 8 months and 3 days, a medium goods vehicle for 11 months and a medium goods vehicle for 12 months during the previous year. His profits and gains from three trucks shall be deemed to be (Rs. 7,500 × 9) + (Rs. 7,500 × 11) + (Rs. 7,500 × 12), i.e., Rs. 2,40,000.

3. Mode of Estimation of Income (applicable from the assessment year 2019-20) –

The mode of estimation of income, as revised with effect from the assessment year 2019-20, is as follows –

(A). Heavy goods vehicle (more than 12,000 kg. gross vehicle weight) –

  1. For a heavy goods vehicle, the profits and gains shall be an amount equal to Rs. 1,000 per ton of gross vehicle weight (or unladen weight) for every month (or part of a month) during which the heavy goods vehicle is owned by the assessee in the previous year or
  2. an amount claimed to have been actually earned from such vehicle,whichever is higher.

(B) Other than heavy goods vehicle –

  1. In the case of a goods carriage (other than heavy vehicle), the profits and gains 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
  2. an amount claimed to have been actually earned from such goods carriage,whichever is higher.

4. No further deduction –

The estimated income is comprehensive. All deductions under sections 30 to 38 including depreciation and unabsorbed depreciation shall be deemed to have been already allowed and no further deduction will be allowed under these sections. However, in the case of a firm, the normal deduction under section 40(b) shall be allowed. The written down value will be calculated, where necessary, as if depreciation as applicable has been allowed.

5. Accounts/audit not required –

The assessee is neither required to maintain books of account under the provisions of section 44AA, nor required to get his accounts audited under the provisions of section 44AB, in respect of his income from truck business.

However, even such an assessee should comply with the requirements of both sections 44AA and 44AB in respect of his businesses which are not covered by this scheme. 

6. Normal provisions applicable for other incomes –

Income from the truck business, estimated in accordance with this provision, is aggregated with other incomes of the assessee, from any other business or under other heads of income, in accordance with the normal provisions of the Act. Accordingly, all deductions under sections 80C to 80U will be available to the assessee, if the conditions therein are fulfilled. 

7. Consequences if lower income is declared –

An assessee may claim his income to be lower than the deemed profits and gains, subject to the condition that the books of account and other documents are kept and maintained as required under section 44AA and the assessee gets his accounts audited irrespective of turnover and furnishes a report of such audit as prescribed under section 44AB.

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